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U.S. employers added 266,000 jobs in April, the government reported Friday, far below what economists had expected and a dramatic slowdown from March’s rapid hiring pace.
The jobless rate rose slightly to 6.1 percent.
Economists had forecast an addition of about a million jobs, which would have been the biggest gain since August. The increase for March was revised down to 770,000 from 916,000.
“It’s understandable, it’s going to take some time, you’re not just going to snap your fingers and get everyone back to work,” Diane Swonk, chief economist for the accounting firm Grant Thornton, said of the lackluster April gain. “It turns out it’s easier to put an economy into a coma than wake it up.”
The manufacturing sector could be hamstrung by supply chain problems, which have slowed or halted production. And many offices are not yet ready to reopen fully. “I just think it takes a while for businesses to figure out how many people they need,” Ms. Swonk said. “I don’t view this as terribly troubling or distressing.”
Ben Herzon, executive director of U.S. economics at the financial services company IHS Markit, agreed. “A single report with unexpected weakness in job gains is not a cause for concern,” he said. “Demand is picking up, activity is picking up.”
He noted that labor force participation had been on the upswing for two months in a row, rising to 61.7 percent last month from 61.4 percent in February.
More opportunities are bubbling up as coronavirus infections ebb, vaccinations spread, restrictions lift and businesses reopen. Job postings on the online job site Indeed are 24 percent higher than they were in February last year.
“There’s been a broad-base pickup in demand,” said Nick Bunker, who leads North American economic research at the Indeed Hiring Lab. The supercharged housing market is driving demand for construction workers. There is also an abundance of loading, stocking and other warehousing jobs — a side-effect of the boom in e-commerce.
The economy still has a lot of ground to regain before returning to prepandemic levels. Millions of jobs have vanished since February 2020, and the labor force has shrunk.
–8.2 million since February 2020
152.5 million jobs in February 2020
As the economy fitfully recovers, there are divergent accounts of what’s going on in the labor market. Employers, particularly in the restaurant and hospitality industry, have reported scant response to help-wanted ads. Several have blamed what they call overly generous government jobless benefits, including a temporary $300-a-week federal stipend that was part of an emergency pandemic relief program.
But the most solid evidence of a real shortage of workers, economists say, is rising wages. And that is not happening in a sustained way.
As Jerome H. Powell, the Federal Reserve chair, said at a news conference last week: “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”
Millions of Americans have said that health concerns and child care responsibilities — with many schools and day care centers not back to normal operations — have prevented them from returning to work. Millions of others who are not actively job hunting are considered on temporary layoff and expect to be hired back by their previous employers once more businesses reopen fully. At the same time, some baby boomers have retired or switched to working part time.
Credit…Sarah Rice for The New York Times
This week the Republican governors of Montana and South Carolina said they planned to cut off federally funded pandemic unemployment assistance at the end of June, citing complaints by employers about severe labor shortages.
That means jobless workers there will no longer get a $300-a-week federal supplement to state benefits, and the states will abandon a pandemic program that helps freelancers and others who don’t qualify for state unemployment insurance. (Montana will, however, offer a $1,200 bonus for those taking jobs.)
“What was intended to be short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home,” declared Gov. Henry McMaster of South Carolina.
But that view is just one piece of a broad debate about the impact of temporarily enhanced unemployment benefits during the pandemic.
Gail Myer, whose family owns six hotels in Branson, Mo., says the $300-supplement is indeed a barrier to hiring. “I talk to people all over the country on a regular basis in the hospitality industry, and the No. 1 topic of discussion is shortage of labor,” he said.
Before the pandemic, Mr. Myer said, there were about 150 full-time employees at his six hotels. Now, staffing is down about 15 percent, he said. Jobs at Myer Hospitality for housekeepers, breakfast attendants and receptionists are advertised as paying $12.75 to $14 an hour, plus benefits and a $500 signing bonus.
Worker advocacy groups offer a different perspective. “The shortage of restaurant workers we are seeing across the country is not a labor-shortage problem; it’s a wage-shortage problem,” said Saru Jayaraman, president of One Fair Wage, a minimum-wage advocacy group.
In surveys of food service workers by One Fair Wage and the Food Labor Research Center at the University of California, Berkeley, three-quarters cited low wages and tips as the reason for leaving their jobs since the coronavirus outbreak. Fifty-five percent mentioned concerns about Covid-19 as a factor. And nearly 40 percent cited increased hostility and harassment from customers, often related to wearing masks, in addition to long-running complaints of sexual harassment.
Amy Glaser, senior vice president at the staffing firm Adecco, said former restaurant workers and others were migrating toward warehousing jobs that had raised wages to as high as $23 an hour and customer service jobs that could be done from home.
An unexpectedly weak report on hiring in the United States rippled through financial markets on Friday, with yields on government bonds tumbling and stock futures pointing to a small gain on Wall Street.
Employers added 266,000 workers last month, the government reported, far below economists’ expectations of an increase of nearly 1 million new positions. The report also revised March’s job gains lower. The dramatic slowdown in hiring could unwind concerns about overheating in the economy.
The primary barometer of those worries, yields on government bonds, tumbled in the minutes after the report. As investors reassessed expectations about how soon the Federal Reserve might need to wind down monetary support, the yield on 10-year U.S. Treasury notes dropped as low as 1.46 percent, down 10 basis points, or 0.1 percentage point. It then rebounded to about 1.53 percent. An index of the U.S. dollar dropped to its lowest level since February.
Investors in high-flying sectors of the stock market have been particularly sensitive to those yields this year. As they climb, they make risky investments less appealing. But on Friday, the sudden drop in yields triggered a rally in technology stocks. Nasdaq futures pointed to a gain of more than 1 percent when trading begins.
Futures on the S&P 500 pointed to a 0.3 percent gain at the start of trading. Stock benchmarks in Europe held on to their gains from earlier. The Stoxx Europe 600 and Britain’s FTSE 100 each rose about half a percent.
Despite the surprise, the April jobs report did show that hiring in the U.S. economy continues, and more opportunities are bubbling up: Job postings on the online job site Indeed are 24 percent higher than they were in February last year.
Credit…Gabriella Angotti-Jones for The New York Times
The United States needs to quickly find new supplies of lithium as automakers ramp up manufacturing of electric vehicles.
Lithium is used in electric car batteries because it is lightweight, can store lots of energy and can be repeatedly recharged. Other ingredients like cobalt are needed to keep the battery stable.
But production of raw materials like lithium, cobalt and nickel that are essential to these technologies are often ruinous to land, water, wildlife and people, Ivan Penn and Eric Lipton report for The New York Times. Mining is one of the dirtiest businesses out there.
That environmental toll has often been overlooked in part because there is a race underway among the United States, China, Europe and other major powers. Echoing past contests and wars over gold and oil, governments are fighting for supremacy over minerals that could help countries achieve economic and technological dominance for decades to come.
Mining companies and related businesses want to accelerate domestic production of lithium and are pressing the administration and key lawmakers to insert a $10 billion grant program into President Biden’s infrastructure bill, arguing that it is a matter of national security.
“Right now, if China decided to cut off the U.S. for a variety of reasons we’re in trouble,” said Ben Steinberg, an Obama administration official turned lobbyist. He was hired in January by Piedmont Lithium, which is working to build an open-pit mine in North Carolina and is one of several companies that have created a trade association for the industry.
So far, the Biden administration has not moved to help push more environmentally friendly options — like lithium brine extraction, instead of open pit mines. Ultimately, federal and state officials will decide which of the two methods is approved. Both could take hold. Much will depend on how successful environmentalists, tribes and local groups are in blocking projects.
Credit…Jessica Chou for The New York Times
Even as a chip shortage is causing trouble for all sorts of industries, the semiconductor field is entering a surprising new era of creativity, from industry giants to innovative start-ups seeing a spike in funding from venture capitalists that traditionally avoided chip makers, Don Clark reports for The New York Times.
“It’s a bloody miracle,” said Jim Keller, a veteran chip designer whose résumé includes stints at Apple, Tesla and Intel and who now works at the artificial intelligence chip start-up Tenstorrent. “Ten years ago you couldn’t do a hardware start-up.”
Chip design teams are no longer working just for traditional chip companies, said Pierre Lamond, a 90-year-old venture capitalist who joined the chip industry in 1957. “They are breaking new ground in many respects,” he said.
Equity investors for years viewed semiconductor companies as too costly to set up, but in 2020 they plowed more than $12 billion into 407 chip-related companies, according to CB Insights. Cerebras, a start-up that sells massive artificial-intelligence processors that span an entire silicon wafer, for example, has attracted more than $475 million. Groq, a start-up whose chief executive previously helped design an artificial-intelligence chip for Google, has raised $367 million.
Taiwan Semiconductor Manufacturing Company and Samsung Electronics have managed the increasingly difficult feat of packing more transistors on each slice of silicon. IBM on Thursday announced another leap in miniaturization, a sign of continued U.S. prowess in the technology race.
More companies are concluding that software running on standard Intel-style microprocessors is not the best solution for all problems. Giants like Apple, Amazon and Google more recently have gotten into the act. Google’s YouTube unit recently disclosed its first internally developed chip to speed video encoding. And Volkswagen said last week that it would develop its own processor to manage autonomous driving.
The Federal Reserve’s Financial Stability Report, released Thursday, followed an unusual six months for markets. Over that period, stocks climbed steadily as the U.S. economic outlook rebounded, and stories of excess began to crop up, such as the frothy markets around so-called “meme stocks” such as GameStop and huge losses at a number of banks tied to problems at a hedge fund, Archegos Capital Management.
“While broader market spillovers appeared limited, the episode highlights the potential for material distress” at financial companies that aren’t banks “to affect the broader financial system,” the Fed said in its report. It said hedge fund opacity had also raised questions during the meme stock episode: Some funds that were betting against the stocks in question took losses as chat board vigilantes poured into them.
The answer to both episodes, the Fed seemed to suggest, starts with better data, Jeanna Smialek reports for The New York Times.
Gary Gensler, the new chairman of the Securities and Exchange Commission, said at a House Committee on Financial Services hearing that the S.E.C.’s staff has been working on a report addressing the issues raised by the GameStop episode that will be released this summer. He also said new rules may be needed for brokerage apps that turn stock trading into a game or contest, a method called gamification, Matthew Goldstein reports.
Mr. Gensler said the collapse of Archegos pushed regulators to consider whether traders should be required to disclose derivatives. Archegos’s losses were mostly attributed to the firm investing heavily in total return swaps, a type of highly leveraged derivative that can give a trader exposure to a stock without actual ownership.