US job growth slows despite reopenings and vaccinations – fr

US job growth slows despite reopenings and vaccinations – fr

The US labor market created just 266,000 jobs last month, and the unemployment rate climbed to 6.1 percent, marking an unexpected deceleration in job creation in the world’s largest economy.

April’s data compared to the 770,000 jobs created in March – a downward revision from the previous estimate – and showed that the US labor market was still well below pre-pandemic levels. In April, 8.2 million fewer Americans were working compared to February 2020.

The report was a big disappointment compared to economists’ expectations that the US economy created nearly 1 million jobs last month. While recreation and hospitality created 331,000 jobs, there were losses in other sectors of the economy, including car manufacturing, temporary help and retail trade.

“We knew it wouldn’t be a sprint, it would be a marathon. Frankly, we are moving much faster than I expected, ”US President Joe Biden said on Friday following the report. “The climb is steep and we still have a long way to go.”

The figures have been released at a time of intense debate among policymakers and economists over the extent to which the ongoing rebound in the United States will trigger a surge in inflation.

Biden administration officials and senior Federal Reserve officials believe consumer price increases will be transient, but some economists and investors fear the U.S. economy may risk overheating. The slowdown in job creation may alleviate these concerns. However, the data could raise new concerns that labor shortages are holding back the recovery.

The lackluster jump in job creation is likely to remove some pressure on the Federal Reserve to hasten deliberations on a first step to withdraw monetary support for the recovery.

“Most of the other evidence suggests economic activity is rebounding quickly, but this is a clear reminder that the labor market recovery is lagging behind the consumer rebound,” said Michael Pearce, senior US economist at Capital Economics.

“For the Fed, we suspect this will mean it will take several months before it deems the economy has made ‘further substantial progress’ towards its ‘broad and inclusive’ full employment target. This means that any discussion of phasing out, let alone rate hikes, is still a long way off, ”he added.

The data will make it harder for the White House to claim that its initial $ 1.9 billion stimulus bill is working as intended, although it may validate its insistence on the continued need for budget support.

The Biden administration wants Congress to take much broader tax action with plans to increase combined spending of $ 4.1 billion on U.S. infrastructure and the social safety net over the next decade, paid for with higher taxes for the rich and big American corporations.

Making her first public appearance at the White House press conference room, Janet Yellen, the Secretary of the Treasury, said on Friday that she still expected a “strong and prosperous economy” in 2021 and 2022.

“I think we will reach full employment next year. But today’s numbers also show that we are not done yet, as our economy continues to heal. It is important to think about ways to rebuild better. And one of those ways is to remove barriers to increased participation in the labor market, ”she said.

Yet Republicans have taken the slowdown in job creation as proof that the president’s policies are failing to generate a rapid rebound, even amid widespread immunizations and benefits for many families from a new round of controls. stimulus.

“The burden on our economy is starting to have a devastating impact on hard-working families,” said Steve Scalise, a senior Republican in the House of Representatives.

Many Republicans and business groups say overly generous federal unemployment benefits, set at $ 300 per week as part of Biden’s stimulus, are holding back hiring by reducing incentives to work. Biden sought to dismiss those allegations on Friday, saying “nothing measurable” suggested this was happening.

Yellen said she did not think unemployment benefits were a “major factor” in slowing job creation. If that were true, she said, it would happen in states where benefits replaced a larger share of wages, but “exactly the opposite” was happening instead.

The yield on the 10-year note, which moves inversely to its price, fell to 1.48%, 0.1 percentage point below its Thursday high, before rebounding above 1.55 %. The yield on two-year notes briefly fell to its lowest level since March before rebounding to 0.14 percent.

Stock markets surged early in trading, with the S&P 500 advancing 0.6%. The Nasdaq Composite index, rich in growth stocks very sensitive to changes in interest rates, rose 0.8%.

Implied rates on Eurodollar futures, contracts that provide a gauge of the market’s expectation of interest rate policy, also fell on Friday, signaling that a rate hike by the Fed may not intervene as soon as investors previously thought. The dollar, measured against a basket of currencies, hit its lowest level since February.

“The weakness is totally baffling,” said Thomas Simons, economist at Jefferies. “Nothing in the period leading up to today suggested that we would see a low number.”

But economists Kathy Bostjancic and Gregory Daco of Oxford Economics suggested it was simply a “respite.”

“We expect employment to accelerate dramatically with the economy adding more than 8 million jobs this year and the unemployment rate falling to 4.3 percent by the end of the year.” , they said.

Additional reporting by Aziza Kasumov in New York


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