Hiring around the U.S. in April was much weaker than most economists expected, with employers adding 266,000 jobs, a Labor Department report showed on Friday.
Some forecasters had predicted payroll gains of at least 1 million, pointing to rapid economic growth this year.
The nation's unemployment rate ticked up to 6.1% from 6% as more Americans sought work. The labor force, defined as the number of people working or looking for work, grew by 430,000 people last month.
The leisure and hospitality sector added 331,000 jobs, but those gains were offset by big losses in temporary help services, transportation and warehousing and the auto sector.
"As shops and restaurants re-opened it looks as if a lot of delivery and temporary help services jobs vanished," Brian Coulton, chief economist at Fitch Ratings, said in a report. "The small rise in the unemployment rate, along with the downward revisions to job gains in March, emphasize just how far away we still are from regaining full employment."
A tale of two job markets
The unemployment rate fell for White workers while staying flat for Latino workers and rising for Black workers, indicating a diverging job market.
"The Black unemployment rate rose slightly to 9.7%, making Black workers the only racial and ethnic group (as a whole) to experience worsening metrics. Meanwhile, the white unemployment rate fell to 5.3%. Clearly, these two groups are experiencing a very different labor market," Elise Gould, senior economist at the left-leaning Economic Policy Institute, said in a blog post.
As COVID-19 restrictions have faded, some employers have reported difficulty finding workers for open jobs, particularly in lower-paying frontline sectors, such as foodservice and retail. The need to take care of children or supervise remote schooling is keeping many workers, especially women, on the sidelines, according to experts.
"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," economists at Capital Economics said in a note.
The role of benefits
Concern that workers are choosing relatively generous unemployment benefits over jobs is leading to calls for an end to a $300 weekly federal benefit on top of state-run benefits that runs through September. The U.S. Chamber of Commerce called for a fast end to the benefit on Friday, claiming that the boost led to about 1 in 4 workers "taking home more in unemployment than they earned working."
Montana and South Carolina this week announced planned to rescind the $300 supplement for unemployed workers next month. Montana will instead give bonuses to unemployed workers who start jobs.
However, many economists dispute the notion that too-generous benefits are keeping workers home, noting that the biggest job gains in April were in relatively low-paid industries, hospitality and foodservice.
"Fewer jobs were added than expected, but the composition of job gains doesn't scream supply constraints as the problem. Gains were strongest in lower-wage industries and low work-from-home industries," Nick Bunker, an economist at Indeed, said on Twitter.
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