US job recovery slower than hoped, despite stimulus

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President Joe Biden’s $1.9tn stimulus package has had initially disappointing results, say economists, as US employers hired fewer workers than expected last month.

The US Bureau of Labor Statistics found that just 266,000 jobs were added in April and the unemployment rate edged up to 6.1%, according to the Bureau of Labor Statistics.

Analysts had expected between 900,000 to two million jobs to be created by the measure but although there has been a surge in hiring in the leisure and hospitality sector over the past month, other sectors, including transportation and manufacturing, had seen a decline in job number or stagnation.

The Democrat Party administration pushed through the stimulus package in March in response to unemployment reaching 9.8 million by the end of February because of lockdowns.

About 770,000 jobs were added in March, which had led to renewed optimism about the pace of the US’s recovery.

In a speech on Friday President Joe Biden said the new job numbers showed the country was “on the right track” and reiterated that the bailout was a “year-long effort to rescue our country”. He dismissed the notion “we should be disappointed”.

The President said: “We knew this wouldn’t be a sprint; it would be a marathon. Quite frankly, we’re moving more rapidly than I thought we would.”

The US economy grew sharply by 6.4% on an annual basis in the first quarter of 2021.

Richard Flynn, UK managing director at Charles Schwab, told the BBC that although the figures might be off-putting to investors, “boom conditions are evident” in terms of GDP, retail sales and job growth. “We are yet to see the full effect of this since the unemployment rate is one of the most lagging of economic indicators,” he added.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, told the BBC that surveys revealed that labour demand in the US was very strong but firms were finding it hard to recruit people.

The reduction in manufacturing jobs was thought to be linked to problems in the car industry where there was a shortage of components. The fall in courier jobs reflected a decline in online ordering as retail outlets reopened.

Part of the reason for the lag in figures is thought to be related to some unemployed people being reluctant to look for work because they fear catching the virus. There has also been a rise in unemployment benefits that may have encouraged some to delay looking for work.

One area where employment is recovering is education, where the return of in-person teaching has seen an increase of 31,000 on the local government payroll.

Analysts also believe that many women, especially working mothers, have left the workforce to care for children. Others have taken up new occupations and have not returned to their old jobs.

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