US hiring sharply misses expectations in April with just 266,000 new jobs added

An expected U.S. hiring boom crashed into a wall in April, with employers adding a measly 266,000 new jobs – sharply missing Wall Street's expectations – amid a growing shortage of available workers.

The unemployment rate unexpectedly rose to 6.1% — while it's still well below the April 2020 peak of 14.7%, it's about twice the pre-crisis level, the Labor Department said in its monthly payroll report, released Friday morning. Economists surveyed by Refinitiv expected the report to show that unemployment fell to 5.8% and the economy added 978,000 jobs.

The figure marks a significant drop from March's downwardly revised number of 770,000 and February's upwardly revised 536,000.  

There are still 8.2 million fewer jobs than there were last February, before the crisis began. 

Although the accelerated vaccine rate, trillions in government stimulus and easing business restrictions seemed to be coming together to support a robust economic recovery, businesses have reported difficulty in onboarding new workers. 

A recent Bank of America analyst note estimated that 4.6 million workers exited the labor force during the pandemic – and only half are expected to rejoin by the end of the year. Companies have been quick to blame the sweetened unemployment benefits provided to workers during the pandemic; the $1.9 trillion stimulus package that President Biden signed into law in March boosted unemployment aid by $300 a week through Sept 6, 2021 and included a third $1,400 payment for millions of Americans. 

Americans who earned less than $32,000 before the crisis began would be better of in the near-term collecting those benefits rather than working, Bank of America said.

At the same time, the Biden administration is pushing forward with passing another $4 trillion in spending, many of which would be directed toward boosting low- and middle-income families.