The economy could add more than 1 million jobs in April, economists say.
Hiring seems to have strengthened as businesses reopen, leading some economists to make big predictions for the number of jobs added during the month. The April employment report is expected on May 7.
Job growth picked up in March, with 916,000 payrolls, and some economists expect that trend has continued. The number of people filing for first-time unemployment benefits fell to a fresh pandemic low of 553,000 for the week ended April 24.
Now that nearly 30% of Americans are fully vaccinated, more businesses are reopening, air travel is picking up and foot traffic in retail stores is increasing.
If nonfarm payroll gains surpass 1 million, it would be the first time since last August, before the second wave of Covid hit in the fall.
“Just based on restaurant bookings, there’s got be a ton more capacity in the restaurant industry right now,” said Tom Simons, a money market economist at Jefferies. “That can’t be done with nobody working. You literally can’t fulfill these bookings with no workers.”
Strong projections
Jefferies economists are forecasting 2.1 million job gains in April, by far the highest estimate on Wall Street.
Evercore expects employment will rise by 1 million jobs. Morgan Stanley economists forecast 1.25 million, and Capital Economics predicts a gain of 1.2 million.
Morgan Stanley economists said their forecast was influenced by the decline in unemployment claims.
“Similar to March, we expect payroll gains to largely come from modest increases in hiring coupled with more substantial declines in the firing rate,” they wrote.
Capital Economics also said the jobless claims data was convincing.
“As a result, we are penciling in a larger 1.2 million increase in non-farm payrolls, although that would still leave employment 7.2 million below its pre-pandemic February 2020 level,” wrote Capital senior U.S. economist Michael Pearce. “With restrictions still being eased in some states, we expect that shortfall will continue to shrink rapidly, as the economy quickly re-adds jobs in the hardest hit sectors.”
The robust forecasts for job growth come against the backdrop of a booming economy. In the first quarter, gross domestic product grew by 6.4%, and it is expected to be as much as 10% for the second quarter.
Leisure, restaurants and retailers
Michael Gapen, chief U.S. economist at Barclays, expects 950,000 payrolls. Gapen said payrolls strengthened further in April, due to fiscal stimulus, vaccinations, falling Covid case counts and easing of restrictions.
“I think it has been a good month,” he said. “The models were wanting something between 900,000 and 1 million. We think the risks to this forecast are to the upside.”
Gapen said if the number is weaker than expected, he would be concerned about rising infection rates.
“That to me is the limiting factor in the short run,” he said. “I think the hiring rate will be really strong in April, May, June and then slow down a bit after that. I think businesses have to ramp up some hiring here.”
Retailers and restaurants, as well as others in the leisure industry, are expected to have added a lot of jobs. However, there is concern extended unemployment benefits are making it harder for employers to lure workers.
“If there’s any risk to our forecast, I don’t feel like we’ve overestimated the progress in reopenings,” said Simons. “It’s more that did the people come back to work or is it these businesses are running a massive productivity spike to do the same business with fewer people.”
Grant Thornton chief economist Diane Swonk expects about 800,000 jobs and says April did not have quite the euphoria of March.
“It will be a strong month,” she said. “We may not get a million, but it will be a strong month.”
