The economy added just 266,000 jobs in April, falling well short of the 1 million new jobs that were expected to be added to payrolls last month, Yahoo Finance reports.
The US missed its projection by more than 700,000 jobs. Friday’s Labor Department report also revised the 916,000 new jobs reported in March down to 770,000.
The unemployment rate stayed roughly the same, hovering around 6%, but that does not tell the full story since many people laid off amid the pandemic are no longer considered part of the labor force.
Some economists and conservatives have claimed there is a labor shortage that may be linked to the high federal unemployment benefits. But data shows that hourly earnings rose less than 1% in April, suggesting that businesses are not raising wages to try to entice workers.
The economy still has more than 8 million fewer jobs on the payrolls than in February 2020 before the pandemic.
The new numbers "could indicate that labor shortages are becoming a significant drag," according to Capital Economics economist Michael Pearce. "Overall, it is difficult to judge how much weight to put on this report at a time when most of the other evidence suggests economic activity is rebounding quickly, but it is a clear reminder that the recovery in the labor market is lagging the rebound in consumption. For the Fed, we suspect that means it will be many months before it judges the economy has made 'substantial further progress' towards its 'broad based and inclusive' full employment goal. That means any talk of tapering, let alone rate hikes, is still some way off."
"A big segment of the workers are still concerned about the pandemic. We estimate roughly 1.6 million workers want a job but didn't look for a job recently because they were still concerned about contracting the virus, or other factors around the pandemic," Bank of America economist Joe Song told Yahoo Finance. "On top of that, you had some workers citing that childcare was still a big factor for their decision not to participate in the labor market."
Stocks rise anyway:
The Dow Jones and the S&P 500 both hit all-time highs when they opened on Friday morning despite the disappointing jobs numbers, according to CNN.
One possible reason is that investors may think that the Federal Reserve will continue to keep interest rates low despite Treasury Secretary Janet Yellen’s prediction that interest rates may soon have to increase.
Friday’s jobs numbers suggest that the Fed will have to continue to help support the economy as it continues to recover.
"This report serves as a reminder that while we have come a long way from the depths of pandemic recession, there is still a long road ahead," Craig Fehr, an investment strategist with Edward Jones, told CNN.