U.S. job growth lost momentum in April, according to a report published by the Bureau of Labor Statistics (BLS) on Friday morning.
Total nonfarm payroll employment rose by 266,000 in April, well below the 916,000 analysts had expected and roughly one-fourth of the job growth in March. Nonfarm payrolls measure nonfarm employment, hours and earnings by industry.
What's behind the big disappointment in job growth? One factor could be a structural shift in the labor market. Job gains in the sectors that are opening up as the pandemic recedes have been partially offset by job declines in jobs associated with the pandemic economy, according to the BLS:
"Notablejob gains in leisure and hospitality, other services, and local government education were partially offset by employment declines in temporary help services and in couriers and messengers."
This structural shift is further reflected in a sharp decline in part-time employment. The number of persons employed part-time due to the crisis situation decreased by 583,000 to 5.2 million in April. This decline reflected a drop in the number of people whose hours were cut due to slack work or business conditions. The number of persons employed part-time for economic reasons is 845,000 higher than in February 2020. These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find full-time jobs.
According to the BLS, the structural shift in the labor market could have been made worse by generous unemployment benefits, making it hard for employers to get people back to work at terrible wages.
The news of weak job growth was music to bond traders' ears. It eases inflationary pressures and lowers the chances of the Federal Reserve removing its accommodative policies. At 9am, the 10-year Treasury bond was trading at 1.51%, down 2.96% from the previous closing, and a lower yield means higher bond prices.
Lower bond yields were also music to the ears of technology investors and traders, sending the Nasdaq heavy index up 1.15%.
| Index Futures | %Change* |
| Dow (DIA) | +0.27 |
| S&P (SPY, Financial) | -0.15 |
| NASDAQ (QQQ, Financial) | +1.15 |
*As of 9 a.m.
Still, it's unclear whether these gains will hold by the end of the trading day. A weak labor market is bad for household income and spending, which eventually translates into lower earnings and equity prices.
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