April jobs report falls short of expectations, but jobs rise in leisure/hospitality sector

Leisure and hospitality saw gains in jobs in April, however, the overall jobs performance in the latest Bureau of Labor Statistics’ “Employment Situation” didn’t live up to pre-report expectations.

“Pre-report expectations were for the economy to add about a million jobs in April as the pandemic recovery was gaining real momentum,” said John Anderson, economist with the University of Arkansas System Division of Agriculture and the Dale Bumpers College of Agricultural, Food and Life Sciences. “The report showed actual job gains of only about a quarter that amount: 266,000.”

With the job gains concentrated in the leisure and hospitality sector, Anderson said “this is a positive indicator of a return to more normal activities, with restaurants, hotels and travel and leisure related businesses staffing back up to handle increasing business. However, this is one of the lower-wage sectors of the economy.”

The average hourly earnings in the leisure and hospitality sector were reported to be $17.88 in the April report — the lowest of any sector reported.

“By way of comparison, average hourly earnings in the manufacturing sector were reported at $29.33 in April,” he said. “That sector actually lost jobs in April according to the ‘Employment Situation’ report: a decline of 18,000 jobs after a couple of months of solid gains.”

Comparisons with the pre-pandemic period make it clear that employment has yet to fully recover from COVID-related disruptions, Anderson said.

Total non-farm employment had reached 152.5 million in February 2020 before pandemic effects began to be felt. The April data shows total non-farm employment of 144.3 million – a major improvement over pandemic-impaired employment but not quite back to the pre-pandemic normal.

Even with these gains in April, the unemployment rate edged up from 6.0 percent in March to 6.1 percent in April.

“This is the first month-over-month increase in the unemployment rate since the onset of pandemic disruptions in March 2020,” Anderson said.

The April report has provided analysts plenty of fodder for discussion.

“The huge divergence between this report’s jobs numbers and pre-report expectations has raised questions about the extent to which the enhanced unemployment benefits enacted during the pandemic are affecting workers’ employment decisions,” Anderson said.

Benefits that allow unemployed workers maintain their income and spending, is a “mechanism made a lot of sense back in the days of a manufacturing economy in which major employers made somewhat regular use of temporary layoffs,” he said. “It arguably makes less sense in our current economy. Still, the point remains that there are valid arguments for some ambiguity around the effects of unemployment benefits on employment levels.”