Leisure and hospitality saw another strong month of job gains. The Bureau of Labor Statistics notes that most of these gains were from food services and drinking places. That includes places like restaurants and bars.
Most industries saw some increase in their employment over the month, but some industries saw larger gains than others. The following chart shows where the job gains, and losses, were from April 2021 to May 2021:
Employment in leisure and hospitality increased by 292,000 in May after increasing by 328,000 in April, totaling four consecutive months of six-figure job gains.
“The leisure and hospitality sector added another healthy amount of jobs, but it was roughly the same number as were added the month before,” Nick Bunker, economic research director at Indeed, wrote in a statement. “Any future pickup in job growth for the overall labor market is dependent on this industry seeing more of a bounceback.”
Elise Gould, senior economist at the Economic Policy Institute, wrote on Twitter that the industry is still below pre-pandemic employment by about 2.5 million. She added she’s “optimistic that we will continue to see solid growth in coming months as vaccine distribution continues and businesses find it safe to reopen.”
The second-largest gain was in the education and health services sector at 87,000, which was higher than the 25,000 job gains this industry had in April. Most of the government jobs added in May were from local and state education jobs. State government education added 50,000 jobs and local government education added 53,000 jobs.
“Growth in ambulatory health care services accounted for essentially all of the employment change in health care,” BLS wrote in an analysis.
Four sectors saw job losses in May, including retail trade which lost 5,800 jobs and construction which lost 20,000 jobs in a single month. At almost 15.2 million jobs, retail trade is still 2.6% below pre-pandemic employment, while at about 7.4 million jobs, construction is still 2.9% below February 2020 employment. Additionally, employment in mining and logging did not change from April.
The Bureau of Labor Statistics’ monthly jobs report is among the most closely watched gauges of economic health, but Friday’s release is even more anticipated than usual.
It’s the first reading since April data showed a sharp slowdown in hiring and stupefied economists across the board. The Friday report will reveal whether the deceleration was a one-month fluke – or the start of a stagnating recovery.
Economists are largely optimistic. The median estimate for May payroll growth sees the US adding 674,000 jobs throughout the month. That would mark a sharp rebound from April’s 266,000-payroll bounce. Economists also expect the unemployment rate to dip to 5.9% from 6.1%. That level would represent a new-pandemic-era low.
Data published Thursday suggests the forecasts could ring true. ADP’s monthly employment report showed the US adding 978,000 private payrolls in May, blowing the 674,000-payroll estimate out of the water. The reading marked the strongest month of private-payroll growth since June 2020 and a fifth straight month of job additions.
Separately, weekly filings for unemployment benefits fell to a fifth consecutive pandemic-era low last week as layoffs slowed further. Jobless claims totaled an unadjusted 385,000 for the week that ended Saturday, narrowly beating the median estimate for 388,000 claims. Claims have steadily trended lower throughout May, signaling the labor market’s recovery picked up after April’s less-than-stellar data.
To be sure, weekly claims counts and ADP’s report are also volatile and only loosely tied to the government’s nonfarm payrolls data. As seen just one month ago, strong prints from both indicators can still precede an upsetting jobs report.
“It is hard to know what to make of the signal from the ADP report because it has not reliably predicted the BLS data in recent months,” Daniel Silver, an economist at JPMorgan, said in a Thursday note. “Declines in initial claims likely reflect improving conditions in the labor market, although other factors could also be at play.”
Hiring should improve, but don’t get too excited
Experts are finding reasons to temper their expectations for other labor-market signals. Data from the Ultimate Kronos Group and Homebase both show modest increases in hours worked in May, Bank of America economists said last week. The former’s shift-work measure rose by just 0.1% between the May and April payroll weeks, compared to the 0.3% decline from the prior period. The reading “could mean a slightly better jobs report but does not suggest a gangbusters print,” the team led by Michelle Meyer said.
The Homebase employee working index rose just 1.7% between the May and April survey weeks. That similarly hints at a “soft reading,” the bank added.
Other metrics, such as the Conference Board’s labor-market differential index and national purchasing managers’ indices, suggest hiring improved in May. Still, the BofA economists cautioned against “reading too much” into such information for the “magnitude of hiring,” and instead see them as pointing to a general improvement in hiring.
“All told, we see scope for decent gains in employment in May following a disappointing report in April,” the team said.
Taper time? Or delay further?
There’s a fair deal riding on the Friday report, the bank added. The Federal Reserve has indicated it won’t pull back on its ultra-accommodative monetary policy until it sees “substantial further progress” toward maximum employment and above-2% inflation.
The latter condition is already being met, with price growth trending above average as the US reopens. The Friday jobs report, then, is a “critical data point” for the Fed’s next steps toward policy normalization, the BofA economists said.
On one hand, a stronger-than-expected report could push the central bank further toward tapering its emergency asset purchases. The Fed has been buying at least $120 billion of Treasurys and mortgage-backed securities each month to support market functioning. Officials have been adamant they don’t expect to shrink the purchases in the near-term, yet minutes from the Federal Open Market Committee’s April meeting suggested they may soon discuss a plan for eventual tapering.
A strong rebound in employment “could give the Fed more confidence in the recovery and the ability to start guiding markets toward a taper,” BofA said.
Conversely, another disappointing report could push tapering further into the future, the economists said. The central bank has made clear that it’s willing to maintain its easy monetary policy for as long as needed to support the economic recovery. Any sign of the labor market recovery stagnating would likely entice the Fed to keep rates near zero for as long as needed to promote hiring.
37. Non-restaurant food servers earn a median of $25,020 a year, and there are 19,320 employed in the hotel industry.
36. Laundry and dry-cleaning workers earn a median of $25,100 a year, and 28,960 are employed in the hotel industry.
35. Maids and housekeeping cleaners earn a median of $25,320 a year, and there are 355,930 employed in the hotel industry.
34. Desk clerks earn a median of $25,370 a year, and 201,620 are employed in the hotel industry.
33. Dining room and cafeteria attendants, as well as bartender helpers, earn a median of $25,530, and 42,740 are employed in the hotel industry.
32. Passenger vehicle drivers earn a median of $25,760 a year and 6,610 are employed in the hotel industry.
31. Fast food and counter workers earn a median of $25,870, and there are 16,290 employed in the hotel industry.
30. Waiters and waitresses earn a median of $26,550 a year, and 108,350 are employed in the hotel industry.
29. Restaurant hosts and hostesses earn a median of $26,710 a year, and 13,670 are employed in the hotel industry.
28. Bartenders earn a median of $26,890 a year, and 31,820 are employed in the hotel industry.
27. Baggage porters and bellhops earn a median of $27,060 a year, and 15,950 are employed in the hotel industry.
26. Dishwashers earn a median of $27,080 a year, and 21,910 are employed in the hotel industry.
25. Food preparation workers earn a median of $28,220 a year, and 9,750 are employed in the hotel industry.
24. Janitors and cleaners (except maids) earn a median of $29,320 a year, and 34,390 are employed in the hotel industry.
23. Landscaping and groundskeeping workers earn a median of $29,580 a year, and 8,340 are employed in the hotel industry.
22. Security guards earn a median of $31,600 a year, and 22,010 are employed in the hotel industry.
21. Restaurant cooks earn a median of $31,720 a year, and 59,580 are employed in the hotel industry.
20. Concierges earn a median of $31,960 a year, and 8,510 are employed in the hotel industry.
19. Office clerks earn a median of $32,550 a year, and 6,020 are employed in the hotel industry.
18. Maintenance and repair workers earn a median of $33,870 a year, and 70,190 are employed in the hotel industry.
17. Bookkeeping, accounting, and auditing clerks earn a median of $35,530 a year, and 15,730 are employed in the hotel industry.
16. First-line supervisors of housekeeping and janitorial workers earn a median of $37,390 a year, and 27,750 are employed in the hotel industry.
15. Secretaries and administrative assistants earn a median salary of $39,040, and 6,120 are employed in the hotel industry.
14. First-line supervisors of food preparation and serving workers earn a median of $40,850 a year, and 21,720 are employed in the hotel industry.
13. First-line supervisors of office and administrative support workers earn a median of $44,190 a year, and 28,150 are employed in the hotel industry.
12. Meeting, convention, and event planners earn a median of $48,350 a year, and 6,320 are employed in the hotel industry.
11. Sales representatives of services earn a median of $53,070, and 17,260 are employed in the hotel industry.
10. Lodging managers earn a median of $55,730 a year, and 27,040 are employed in the hotel industry.
9. Human resources specialists earn a median of $56,760 a year, and 3,440 are employed in the hotel industry.
8. Chefs and head cooks earn a median of $60,020 a year, and 10,870 are employed in the hotel industry.
7. First-line supervisors of mechanics, installers, and repairers earn a median of $61,130 a year, and 6,270 are employed in the hotel industry.
6. Accountants and auditors earn a median of $62,120 a year, and 6,800 are employed in the hotel industry.
5. Food service managers earn a median of $67,170 a year, and 6,020 are employed in the hotel industry.
4. General and operations managers earn a median of $79,330 a year, and 12,870 are employed in the hotel industry.
3. Administrative services and facilities managers earn a median of $86,880 a year, and 2,960 are employed in the hotel industry.
2. Sales managers earn a median of $94,000 a year, and 4,620 are employed in the hotel industry.
1. Financial managers earn a median of $112,520 a year, and 3,030 are employed in the hotel industry.
Method and data source
Although the leisure and hospitality industry is slowly recovering as the US continues to reopen and more people start to travel again, employment projections show the hotel industry could still end 2021 with fewer jobs than before the pandemic.
According to the American Hotel & Lodging Association, hotels are projected to see a loss of 478,245 jobs in 2021 relative to 2019 employment. The American Hotel & Lodging Association notes that the projections are based on just hotel property jobs, and don’t include losses in related businesses.
Hotels employ a wide variety of workers, and salaries range from well below the US median wage to very high paying.
Hotel jobs tend to be lower paying than average. The median annual wage for an employee in the traveler accommodation industry was just $28,320, below the overall median wage of $41,950, in 2020 (the most recent data). Housekeepers, for example, earned just $25,320 per year in 2020.
The above slides are employment and wages for 37 select occupations in the hotel industry, ranked from lowest to highest wage. Both the number of people in that job and median annual pay are May 2020 figures from the Occupational Employment and Wage Statistics program.
Using that data, we found the average annual salaries, as reported by the BLS, for 19 medical and protective-service roles where saving lives is a part of the job. We ranked the above from lowest to highest average annual salaries and included employment figures as of May 2020, the most recent period for which data is available.
Lifeguards tend to make a relatively low annual salary, while firefighters and police officers are well compensated on average. Surgeons are very highly paid.
The motion picture and sound recording industry continues to have a hard time adding jobs and moving closer back to where employment was before the pandemic.
April’s jobs report from the Bureau of Labor Statistics was not what economists expected to see. The consensus estimate was for an addition of 1 million more payroll jobs in April, but last month’s gain was only 266,000. Even worse, nonfarm payroll employment gains were revised down in March from 916,000 to 770,000.
At the industry sector level, leisure and hospitality was the biggest winner with 331,000 jobs added. The second-largest gain was in government, which saw 48,000 jobs added last month.
Even with monthly gains and declines, we can look at how April employment in various industries with different typical wages compares to employment from before the pandemic. The following chart shows the percent change in employment between February 2020 and April 2021. We also included each industry’s median hourly wage as of May 2020 from the BLS’ National Occupational Employment and Wage Estimates program along the horizontal axis.
The motion picture and sound recording industries, which fall into the information sector that gained 1,000 jobs in April, lost 3,100 jobs last month. The motion picture and sound recording industry has been around 40% below February 2020 employment since September. The performing arts and spectator sports industry, which has similarly been far below pre-pandemic employment throughout the pandemic, is 31.3% below pre-pandemic employment as of April 2021.
“The lack of job growth in many industries most harmed by the pandemic was disappointing,” Nick Bunker, an economist at Indeed, said in a email to Insider. “Hopefully the pandemic continues to recede and these industries will be able to add more jobs on a sustainable basis.”
The couriers and messengers industry had mainly seen jobs added each month during the pandemic as people ordered things for delivery while staying at home during lockdowns and while working remotely. Couriers and messengers, however, saw a decline of 77,400 jobs in April. This sector was 23.1% above February 2020 employment in March 2021 after 13,900 jobs were added that month. But that difference fell to 14.3% above the pre-pandemic level in April after the industry lost jobs for the first time since December.
“One possibility is that demand for these services are declining as more in-person services and activities reopen. Employers might be letting workers go because they are uncertain that pandemic-era trends will last much longer,” Bunker said.
In some ways, the April jobs report resembled an optical illusion, with people making differing observations from a dataset that didn’t fit into a clean narrative.
In this case, Democrats and Republicans came to opposite conclusions about the report and what it means for the way forward in healing an economy battered by the pandemic.
The Friday report showed the economy recovered 266,000 jobs, a smaller amount defying expectations of a massive job surge on the back of government stimulus dollars, increased vaccinations, and easing restrictions. Economists had forecasted at least 1 million regained jobs.
In response, the GOP is demanding to end parts of President Joe Biden’s stimulus and calling for the government to slam the brakes on its spending. Democrats instead urged the passage of Biden’s $4 trillion infrastructure plans, viewing the lackluster report as another pillar in their argument that more spending, in part on childcare, would accelerate the recovery.
It sets the stage between the parties for a multitrillion-dollar fight on infrastructure, jobs, and families that will take up much of the White House’s time over the next few months.
The president argued for patience with his economic agenda on Friday. He said “more help is needed” and mounted a robust defense of his $1.9 trillion stimulus, which provided $1,400 direct payments and a $300-per-week federal unemployment benefit.
“When we passed the American Rescue Plan, I want to remind everybody, it was designed to help us over the course of a year – not 60 days – a year,” Biden said. “We never thought that after the first 50 or 60 days, everything would be fine.”
He flatly rejected the argument from Republicans and business groups that federal jobless aid has been sidelining people from the workforce, saying that was “nothing measurable.”
“We’re still digging out of an economic collapse that cost us 22 million jobs,” Biden said. “Let’s keep our eye on the ball.”
“The evidence is clear that the economy demands urgent action, and Congress will not be deterred or delayed from delivering transformational investments,” she said in a statement.
Republicans had already lined up against Biden’s plans, criticizing the proposed tax hikes on large firms and wealthy Americans as a future anchor on the economy. They pounced on the report in a fresh sign of their hardening resistance.
The GOP swung at Biden’s handling of the economy, arguing that the jobless aid was disincentivizing people from searching for a new job.
“This is a stunning economic setback, and unequivocal proof that President Biden is sabotaging our jobs recovery with promises of higher taxes and regulation on local businesses that discourage hiring and drive jobs overseas,” Rep. Kevin Brady, ranking Republican on the House Ways and Means Committee, said in a statement.
He also contended that jobless aid was disincentivizing people from returning to work. The argument mirrored one made by the Chamber of Commerce, an influential business group which on Friday called for an end to the $300 federal unemployment benefit.
Many economists have long disputed that federal jobless aid has kept people from returning to work. Unemployment claims has steadily fallen over the past month. They tend to cite other factors like the lack of available childcare and school closures.
Those burdens have fallen more on women, causing 2 million women to leave the workforce in the past year. Still, experts say the US will regain its economic footing eventually, though the nation faces a rocky path ahead.
“We’re gonna see pockets of strength, pockets of weakness, areas of overheating, areas where it is uncool – it’s going to be complicated and messy,” Jason Furman, a former top economist to President Barack Obama, told Insider in an interview. “But I think hopefully all moving in the right direction.”
The US economy only added 266,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday. That’s way less than 1 million, the median estimate for payroll gains by economists surveyed by Bloomberg. While it was the fourth consecutive month of payroll increases, it was the smallest since September.
As a Morgan Stanley note from economist Robert Rosener’s team stated, “The expected ‘string’ of strong jobs reports has started to look more like a modest trail of crumbs.”
In the process, unemployment has risen again, albeit slightly from 6% to 6.1%, it was the opposite direction of the forecasted decline to 5.8%.
Job growth was strongest in the leisure and hospitality sector, adding some 331,000 payrolls. More than half of this increase was linked to hiring in food services and bars, offsetting declines in other sectors such as temporary help services.
The staggering numbers indicate that while the economy is still set to come roaring back to life this year, it won’t look anything like it did in 2019, and jobs may not come back at nearly the same rate as consumer spending ramps up.
Consumer spending recovering faster than jobs
The US economy is on the verge of a glow-up. Vaccines are increasingly finding their way into arms, big cities are reopening, and Americans are sitting on $2.6 trillion in excess savings, between three stimulus checks and a decline in discretionary spending.
They’re already swiping their cards on things like outdoor activities, transit, restaurants, clothes, and beauty as they prepare for what Insider reported is shaping up to be a “hot vaxx summer.” Economists expect this to continue, predicting that a lockdown lift will see the biggest boomtime in a generation.
But the return of consumers to the economy hasn’t yet been matched with blowout job growth, which is putting the predicted post-pandemic boom in a new light. The US is still down roughly 9.8 million jobs from its pre-pandemic peak. While relaxing restrictions is expected to help narrow this gap within the incoming months, April’s payrolls spark concern over how easy these gains will be.
The disruption to the experience economy is still taking its toll. Leisure and hospitality may have seen the most job gains in April, but employment in certain industries of this sector still hasn’t reached pre-pandemic levels.
Hallmarks of the 2019 economy that suddenly went on pause last year – the payrolls of motion picture and sound recording industries, travel arrangement and reservation services, performing arts and spectator sports, and accommodation – were all still at least 25% below where they were before the pandemic. Hollywood and travel may not look the way they once did on the jobs front – or not for years, meaning job gains will have to come from somewhere else.
Countries will need to “think well in advance” of what a post-pandemic economy will look like so as to add jobs where they’re going to be, Kristalina Georgieva, managing director of the International Monetary Fund, said in a Thursday video conference. Federal Reserve Chair Jerome Powell also noted that millions of Americans will struggle to find work as they acclimate to a permanently changed labor market.
“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” he said in the conference. “It’s important to remember we are not going back to the same economy, this will be a different economy.”
However, some experts remain optimistic. Jason furman, former top economist to former president Barack Obama, said on MSNBC Friday that he expects hiring to pick up during the summer. “I think we’re gonna see a hot summer in the labor market,” he said.
Lockdown lifts are just beginning and vaccinations are still rolling out. That is all to say: it’s still early on. But that we’re in the first stages of a recovery means that the 2019-vintage experience sector of the economy won’t snap back instantaneously, and that other industries are still grappling with the worker effects of not having properly estimated demand for goods during the pandemic.
April’s jobs report was a strong signal that recovery won’t be as simple as going back to the economic playbook from the before times. Instead of seeing an economy restored to what it once was, we might see an economy reshaped into something new.
After April’s shockingly disappointing jobs report, it looks more like “it’s not the economy, stupid, it’s the virus.”
March’s strong jobs data – along with widespread projections of a coming economic boom – had raised optimism among economists for a continued recovery in the labor force. It prompted Federal Reserve Chair Jerome Powell to deem March an “inflection point” for the reopening of the economy, and experts saw it kicking off a season of outsize payroll increases. But the drop in April makes clear the virus continues to bite.
Economists had expected payroll gains to reach 1 million, but the country added just 266,000 jobs last month. It was the smallest monthly increase since January and the biggest miss of payroll forecasts in more than two decades. The unemployment rate rose to 6.1%, female employment declined, and, although hard-hit sectors like leisure and hospitality saw healthy gains, most others posted either meager growth or shed jobs entirely.
The Bureau of Labor Statistics’ Friday release underscores just how much the labor market still has to recover, and that the climb won’t be as easy as most economists anticipated. Even if April stands out as a gloomy outlier, the average pace of payroll growth suggests it could take years to fully recoup the millions of jobs lost to the pandemic.
What went wrong?
The jobs report was such a shock that it’s hard to find a single explanation at first glance. It also highlights just how inadequate forecasting tools are for measuring this unique economic moment.
Economists typically use a combination of quantitative and qualitative data to estimate future growth. Indicators like weekly jobless claims and hours worked join anecdotal evidence and broad surveys to create forecasting models. Economists’ calculations, when tallied together and averaged, usually come close to guessing monthly payroll additions.
The April data serves as a wake-up call for the many forecasters who didn’t even come close to guessing correctly. Whether models overlooked details like COVID-19 fears or bullish biases tarnished forecasts, economists need to reconcile how they were so wrong.
The disappointment was likely fueled by several factors instead of one solvable hurdle. Despite President Joe Biden’s overdelivering on vaccinations, the country is far from placing the coronavirus pandemic behind it. Daily case counts still averaged about 50,000 at the end of last month, and highly contagious strains continue to spread across the US.
The coronavirus pandemic has also been notable for the “she-cession,” hurting female employment much more than men. The absence of affordable childcare and lack of in-person schooling around the country likely kept some Americans home instead of working, as born out by the April report, which showed women – who disproportionately take on childcare responsibilities – losing jobs through the month.
How big is the labor shortage?
Last month also saw several businesses across the manufacturing and service sectors reporting difficulties in finding workers. The jury is still out on how widespread worker shortages might be, as about 10 million Americans remain unemployed. On one hand, some economists suggest boosted unemployment benefits cut into the incentive to find work. Strong wage growth in the leisure and hospitality sector also signals businesses may need to lift compensation to attract workers.
“The benefits are due to expire in September but perhaps people think jobs will be just as easy to find then as they are now, so why take a job today?,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said. “If people continue to resist taking the jobs on offer at the pay on offer, then wages will have to rise more quickly.”
The Chamber of Commerce called on lawmakers to withdraw the federal benefit to unemployment insurance following the April report. The supplement results in 25% of recipients earning more from unemployment benefits than by working, Neil Bradley, executive vice president and chief policy officer at the Chamber of Commerce, said in a statement.
“We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions pose to our economic recovery from the pandemic,” he added.
The April data does not quite agree with the chamber’s argument, showing labor demand overshadowing anecdotes of a supply shortage. April job gains were strongest in lower-wage industries and in sectors with in-person jobs. The composition of last month’s job additions “doesn’t scream supply constraints as the problem,” Nick Bunker, an economist at Indeed, wrote on Twitter.
Separately, the number of Americans temporarily laid off ticked slightly higher in April. That also signals labor demand wasn’t as robust as businesses’ anecdotes suggested.
Looking to other labor-market data, the steady decline in weekly jobless claims now looks much less encouraging for the recovery. The April uptick in unemployment comes as filings for unemployment benefits fell throughout the month to numerous pandemic-era lows. The drops initially seemed to signal that more Americans were returning to work, but BLS’ report suggests the downtrend has more to do with Americans dropping out of assistance programs than finding employment.
It could take months for the government to lend a hand
Much of the last few months’ promising job gains were linked to massive stimulus packages. The CARES Act helped a sharp hiring rebound after initial COVID-19 lockdowns in March 2020. And Biden’s $1.9 trillion plan in March 2021 spurred stronger economic activity last month.
The president has since rolled out two new spending proposals, the larger of which would spend $2.3 trillion on job creation. The American Jobs Plan would create millions of jobs by funding traditional infrastructure projects, clean energy initiatives, and nationwide broadband, Biden said in a Thursday speech. Biden’s administration has at other times cited a Moody’s Analytics projection of 2.7 million new jobs from the American Jobs Plan.
The smaller package, named the American Families Plan, could support hiring in its own right by overhauling the care economy, as it seeks to provide paid family and medical leave and childcare support.
Yet such support is likely months away. Republicans have balked at both plans, lambasting their hefty price tags and the tax hikes proposed to offset them. Democrats seem to face a challenge passing the package on a party-line vote via reconciliation, as some moderates in their party have yet to throw their full support behind the follow-up packages as they exist.
To be sure, the April report represents just one month of hiring. May numbers could show a healthy rebound and revive the positive trend. The economy is not even fully reopened from virus-safety considerations yet, so rebounds are likely.
But with additional fiscal support far on the horizon and economists highlighting a number of obstacles hindering job growth, the resurgent spring recovery for jobs that many economists were predicting is gone.
Employment gains across sectors were not as spread out as they were in March. The following chart shows what sectors saw job gains and losses from March to April:
The biggest rebound in April was in leisure and hospitality; this was the third-consecutive month of job gains for this sector. Most of the jobs added in leisure and hospitality were from food services and drinking places. Food services and drinking places added 187,000 jobs last month, but the industry is still 13.5% below its pre-pandemic employment level from February 2020.
“At least job gains picked up in the leisure and hospitality sector, where job growth is desperately needed,” Nick Bunker, an economist at Indeed, said in a statement about the latest figures. “But the gains were not as fast as hoped for or, frankly, as needed. Employment in these industries is still almost 17% below pre-pandemic levels.”
The sector that saw the second-most gains was government. This sector’s employment rose by 48,000 last month. BLS noted that most of the gains in this sector were in local education, which added 31,000 jobs in April.
After adding jobs in March, employment in professional and business services dropped the most last month. This sector lost 79,000 jobs last month. BLS wrote in the jobs report that “employment in temporary help services declined by 111,000” in this sector.
Construction, however, did not see any employment change from March to April. The sector did add 97,000 jobs in March after a loss of 57,000 jobs in February.
“Shockingly in a period of quickly rising housing prices, construction industries added no new jobs in April,” Bunker said.
The Bureau of Labor Statistics’ upcoming jobs report is expected to show strong payroll growth through April as the US reopened. But where most economists see a moderate month-over-month improvement, Aneta Markowska of Jefferies stands out in her bullishness.
The median estimate from economists surveyed by Bloomberg for April payroll growth sits at 1 million payrolls. That would mark a pickup from the 916,000 jobs added in March and the strongest month of job growth since August.
Markowska, Jefferies’ chief economist, forecasts that the economy added 2.1 million jobs last month. Not only is that more than double the median forecast, but also 800,000 payrolls greater than the next highest projection from a top economist. The unemployment rate will fall to 5.2% from 6% and beat the forecast of 5.8%, according to the bank.
While Markowska’s estimates stand leagues away from the consensus, the chief economist told Insider she has a tougher time understanding the median forecast than supporting her own.
“To be honest, I’m sort of asking the same question in reverse. What is everybody else not seeing?” Markowska said. “I run a number of models and the lowest one gives me an estimate of 1.4 million.”
Looking to quantitative data, Markowska highlighted changes in jobless claims as supporting growth of more than 1 million payrolls. Kronos data tracking hours worked correlates well with nonfarm payrolls and signals an April gain of 1.6 million jobs, she added.
BLS’ survey timing also backs up Jefferies’ forecast. The March report had little to do with reopening, as the survey window closed on March 13, Markowska said. The April report, due for release Friday morning, should better capture how reopening and Democrats’ stimulus boosted job growth in the leisure, hospitality, and retail sectors, she added.
Still, the hard data only makes up part of Markowska’s projection. Reports like the Census Bureau’s Household Pulse Survey and The Conference Board’s own survey point to growth as high as 4 million payrolls, the economist said. Although survey responses are volatile and harder to tie to quantitative data, they support Markowska’s argument for a blowout month of job gains.
“Obviously [3 million] sounds excessive, and I wouldn’t rely on any of those individually. But they certainly give me more confidence that we could get something closer to 2 million,” she said.
Looking beyond April growth and into 2022
Robust hiring could last into the summer, and even though Markowska sees the pace tapering off later in the year, she still expects growth to trend above the pre-pandemic norm. Jefferies’ GDP forecast calls for a 7% expansion in 2021, slightly exceeding the Federal Reserve’s estimate for 6.5% growth. That rate implies average monthly payroll additions of about 500,000 payrolls in the final month of 2021, Markowska said.
The chief economist’s optimism isn’t relegated to 2021. Consensus forecasts see the rate of recovery dropping off in 2022 as stimulus expires and easy gains turn into more modest improvements. But where the Fed expects GDP growth to slow to 3.3% next year, Markowska cited a still-elevated savings rate and expectations for stronger production for her 5% growth forecast.
“There’s still a lot of upside for industrial production. I think, by the middle of the year, you’re going to be looking at capacity utilization rates that match the peaks from the last cycle, and they’re going to keep going,” she said.
“That’s where I really differ: the ability of this economy to sustain a lot of that momentum. Whereas a lot of people see a fiscal cliff happening next year, I think that’s more of a story for 2023.”