U.S. job growth unexpectedly slowed in April from the previous month as employers struggle to attract workers, a development that is slowing momentum in the labor market.

April saw 266,000 created after a downwardly revised increase of 770,000 in March, with the unemployment rate rising to 6.1% from 6.0% in the previous month The market consensus expected a 1 million increase in hiring in April and an unemployment rate at 5.8%.

This payroll data leaves overall employment still well below its pre-pandemic level and is consistent on the one hand with recent company comments highlighting the challenges in filling vacant positions.

However, most of the factors preventing people from re-entering the labor force should be resolved in the coming months if vaccinations continue and as unemployment benefits expire.

A less salient point, and one worth putting in context, is that some companies are reporting that higher unemployment benefits and the latest round of pandemic relief checks are discouraging a return to work even as job openings approach record levels.

The shortage of job seekers has prompted some states to take steps to alleviate the labor shortage. For example, Montana is trying to lure people into the workforce with a $1,200 payment if they stop collecting unemployment benefits and work for at least four weeks. South Carolina plans to end all federal and pandemic-related unemployment programs by the end of June.

U.S. Job creation and unemployment rate