Disappointing April Jobs Data Pose New Challenge For Biden Agenda

The United States added just 266,000 jobs in April -- a quarter of the number expected -- in a surprise setback for President Joe Biden's efforts to revive an economy blighted by the Covid-19 pandemic.

The weak hiring also pushed the unemployment rate up slightly to 6.1 percent, according to the Labor Department's monthly employment report released Friday.

The data defied economists' upbeat predictions that widespread Covid-19 vaccines and government relief measures would allow businesses to return to normal and add one million jobs last month.

Biden said such setbacks are not unusual during recoveries, and the report undermined criticism that his massive spending programs were not needed since the economy was already recovering.

"We knew we were facing a once-in-a-century pandemic and once-in-a generation economic crisis. We knew this wouldn't be a sprint, it'd be a marathon," the president said in comments following the data release.

He again called on Congress to approve two spending proposals costing more than $4 trillion that are aimed at revamping US infrastructure and the workforce.

"We can't let up. This jobs report makes that clear. We've got too much work to do," he said.

While analysts say the jobs rebound may still happen in coming months, the report nonetheless complicates that assumption.

"This is a big miss that changes how we think about the recovery," University of Michigan economics professor Justin Wolfers said on Twitter.

On Wall Street, the Dow and S&P 500 finished at record highs, with investors regarding the weak report as improving the chances Biden's spending plans are approved and the Federal Reserve keeps interest rates lower for longer.

Unemployment surged in the United States when the Covid-19 pandemic began in March 2020, but has declined in the year since, aided by the vaccines and three massive government rescue packages.

The April data show the economy has 8.2 million fewer jobs than it had in February 2020, before the pandemic hit.

In March, Biden signed the $1.9 trillion American Rescue Plan, and is now asking Congress -- which his Democrats only barely control -- to pass a $2.3 trillion jobs and infrastructure proposal aimed at fighting climate change and revamping roads, bridges and other infrastructure.

He also proposed a $1.8 trillion plan to expand education, childcare and social programs.

The Republican opposition has generally regarded his proposals as a spending spree fueled by tax increases they see as harming American competitiveness, and lawmakers pointed to the downbeat employment numbers to make their case.

"This terrible jobs report needs to serve as an important reminder that jacking up taxes right now on the job creators will absolutely only make this situation worse," Republican congressman Lee Zeldin tweeted.

Meanwhile, some business groups like the US Chamber of Commerce argue that generous pandemic unemployment benefits are making it hard for firms to fill open positions.

But Biden downplayed that concern, saying there was no measurable impact from the extra $300 in weekly aid the American Rescue Plan offered jobless workers.

Treasury Secretary Janet Yellen argued that the hiring data was "a little bit stronger than the headline numbers might suggest."

Speaking to reporters at the White House, Yellen pointed to a decline of nearly 600,000 in the number of people working part-time because they were unable to find full-time work, as well as an increase in average hours worked.

The data showed important sectors were rehiring, with the leisure and hospitality sector -- comprising the bars and restaurants hardest-hit by pandemic business closures -- adding the most jobs with a gain of 331,000 last month.

However, that hiring was offset by jobs losses among temporary workers and couriers and messengers, which fell 111,000 and 77,000, respectively.

Meanwhile, motor vehicles and parts manufacturers lost 27,000 positions, perhaps a sign the global semiconductor shortage that has forced American automakers to cut production is taking a toll.

After decreasing slightly in March, average hourly earnings increased by 21 cents to $30.17, the report said, an indication that shortages of employees may be forcing businesses to up their compensation.

The Labor Department also revised its strong March report downwards to show 770,000 positions added, 146,000 less than initially reported, though hiring in February was revised up by 68,000.

Analysts who had forecast a big employment gain in April differed as to why this report was such a huge miss.

"Health concerns and child/elder care issues are likely weighing on payroll growth," Rubeela Farooqi of High Frequency Economics said in an analysis.

But she and other economists predict stronger rehiring in the months to come.

"The reality is that the labor market is tightening and the only thing keeping job gains down is supply, not demand," economist Joel Naroff said.

"The economy is racing forward and that is what we should focus on."