In April, the economy added 266,000 nonfarm jobs, far lower than consensus forecasts of around 1 million and March’s gain of 770,000. This slowdown reflected solid performance in sectors that have been more heavily impacted by the pandemic, such as leisure and hospitality (+331K), other services (+44K), and government (+48K), which were offset by job losses in sectors that recovered earlier, like temporary help services (-111K), couriers and messengers (-77K), and food and beverage stores (-49K). Other sectors that were performing relatively well in previous months such as construction (0K), manufacturing (-18K), retail trade (-15K), mining (3K) and health care (+19K), experienced a mix of modest declines and gains, mainly reflecting supply chain and sourcing constraints. Overall, total employment is around 10.2 million jobs below where it would have been in the absence of the pandemic.

The unemployment rate surprised to the upside, edging up 0.1pp to 6.1% against a consensus estimate of 5.8%, reflecting an increase of 102K in the number of unemployed persons. Despite the first increase in the unemployment rate in 12 months, the number of people not in the labor force declined by 330K, and the flow from not in the labor force to employment increased by 251K. Nonetheless, relative to February 2020, the number of people not in the labor force remains 4.9 million higher. The broader unemployment rate U6, which adds marginally attached workers and part-time workers for economic reasons, declined to 10.4% from 10.7% in the previous month; however, it remains 3.4pp higher than February 2020. Long-term unemployment declined by 35K, but has remained practically unchanged at around 4.2 million for the past three months; the rate has stayed flat at 2.6% for three consecutive months.

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This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.

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