The U.S. economy gained a disappointing 266,000 jobs last month, despite widespread forecasts that the number would top 1 million, according to the latest monthly employment report released Friday by the Bureau of Labor Statistics.
The unemployment rate rose from 6 percent to 6.1 percent, contrary to expectations but still down from a historic peak of 14.8 percent last April, the highest level since the Great Depression.
The highly anticipated report was expected to show strong payroll growth, with some analysts even predicting job gains beyond the 2 million mark, after widespread vaccinations have spurred Americans to dine out, take vacations and venture out to stores after months of restrictive measures.
"Starting up an economy after a pandemic… is going to be a bumpy process," Treasury Secretary Janet Yellen said Friday afternoon at a White House press briefing. She cited shortages in semiconductor chips and lumber, but pushed back on any notion that the lackluster headline jobs number represented anything other than progress.
"I’ve watched data for a long time," former Federal Reserve Chair Yellen said. "I know that it is extremely volatile. One should never take one month’s data as an underlying trend."
Other economists were less sanguine.
"This might be one of the most disappointing jobs reports of all time," said Nick Bunker, economic research director at Indeed Hiring Lab. "The labor market needs to gain 8.2 million jobs to put us back where we were pre-pandemic, not accounting for the jobs that would have been created if the pandemic never happened. Every month job gains don’t accelerate puts us further behind."
Widespread vaccination has been powering a return to normalcy, with more than 107 million people in the U.S. now fully vaccinated, according to data tracking by NBC News. That has led to consumer confidence that is propelling the spending surge, as stores, bars and restaurants increase capacity.
The Centers for Disease Control and Prevention said Wednesday that the U.S. could be through the worst of the Covid-19 pandemic by July, if vaccinations continue at high rates and people wear masks and physically distance when necessary.
Despite a disappointing headline number, the labor participation rate and wage growth all came in better than expected, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
“The labor market remains on track and will be more than enough to underpin consumer confidence and consumption,” he said.
Some economists and employers say President Joe Biden's relief package, which included stimulus checks as well as extended pandemic benefits for the unemployed, is deterring some workers from returning to their old jobs or seeking out new positions, resulting in worker shortages.
Combined unemployment benefits can equal $600 a week, or about $16 per hour, more than many entry-level jobs pay. Some businesses have even resorted to offering cash signing bonuses to attract workers.
When asked if enhanced unemployment benefits were keeping workers at home, Biden said "No. Nothing measurable," at a White House news conference on Friday afternoon.
"We're still digging out of an economic collapse that cost us 22 million jobs," he said.
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Other economists say the special pandemic payments have been necessary to keep food on the table for workers who have to stay home to help their children with remote schooling, or assuage lingering concerns about contracting the virus.
Overall, around 16 million people are still claiming unemployment benefits — and 12 million of those unemployed workers are on federal pandemic emergency programs, which expire in September.
“The healing of the job market, including reduction of unemployed and those seeking and receiving jobless aid, is as important an economic thread as any being monitored amid the reopening story," said Mark Hamrick, senior economic analyst at Bankrate. "Yes, there’s a great deal of uncertainty associated with all of this, but that must be viewed within the context of improvement overall.”