MBA explains the reasons why…
The US economy created around 266,000 new jobs in April – a sharp slowdown from the 770,000 gain in March – the Bureau of Labor Statistics reported today.
What caused the unanticipated deceleration in job growth? Mike Fratantoni, chief economist at the Mortgage Bankers Association, pointed to employment declines in several sectors.
“While job gains continued in the leisure and hospitality sector, there were actually declines in many of the sectors that showed growth in March, including manufacturing (-18,000), retail trade (-400,000), transportation and warehousing (-77,000), and temporary help services (-111,000),” he said. “Local government education employment inched up by 31,000 but remains almost a million jobs below pre-pandemic levels.”
Construction employment remained flat over the month. Job growth in the industry is up by 917,000 year over year but is 196,000 below its pre-COVID level. Fratantoni said that this doesn’t match the strong growth in housing starts data, which would imply the need for more workers.
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“Overall, data runs counter to the recent decline in initial claims for unemployment insurance, and Wednesday’s ADP data, which showed strong growth in private payrolls,” Fratantoni said.
There was little change in the 9.8 million persons who are unemployed, as well as in the unemployment rate, which is at 6.1%. The survey data also showed that more workers returned to the office in April. The number of employed persons who telework because of the pandemic fell to 18.3% from 21% in March.
On the bright side, more workers were able to add hours, with the number of those who work part-time but wanted a full-time position dropping by 583,000 to 5.1 million in April. There was also a slight increase in the average weekly hours, up from 34.9 hours to 35 hours.
“Recent weeks have seen increasing reports that employers are having difficulties filling open positions. Additionally, supply chain challenges across the economy are likely impeding the pace of activity and pushing up input costs for many employers,” Fratantoni said. “We continue to expect robust job growth and housing demand through the remainder of the year, but this report suggests that the rate of improvement in the job market is going to be much less consistent than other indicators would suggest.”
