• Non-farm payrolls rise by 2.54 million in May, rather than losing 8 million.
  • Unemployment rate fell to 13.3% from 14.7%, much better than the -19.8% prediction.
  • Underemployment rate falls to 21.2% from 22.8%.
  • Equity futures soar, dollar gains, Treasury yields rise.

The labor market collapse reversed in May as a totally unexpected gain in employment underlined the resilience of the American economy and the positive impact of the government’s efforts under the $2 trillion Payroll Protection Program to keep people at work.

Non-farm payrolls rose by 2.54 million last month, a vast improvement from the 20.5 million who were furloughed in April and less than half the -8 million forecast. 

Non-farm payrolls

FXStreet

Continuing unemployment claims had signaled two weeks ago that people might be returning to work when the total receiving unemployment benefits dropped 4.074 million instead of rising 838,000.

Private payrolls for May from Automatic Data Processing (ADP), the paycheck preparation giant that covers about one-sixth of the US market, suggested the same when they fell just 2.76 million rather than the 9 million consensus forecast.

Underemployment and initial claims

The unemployment rate, U-3, fell to 13.3% in May from 14.7% in April and 4.4% in March. That 8.9% jump in sixty days of reporting is still the fastest rise in joblessness in US records that go back almost a century.  The highest unemployment in US history was 25.6% in May 1933.

The underemployment or U-6 rate, that includes individuals who have looked for work in the past year rather than just the prior month of the traditional U-3 list declined to 21.2% from 22.8%.  

Almost 43 million people have filed initial jobless claims, an astonishing 26% of the workforce. In the week of May 22  13% of workers, 21.5 million people, were collecting unemployment benefits.

Market reaction

The economic debacle has practically vanished from the equity and currency markets. Dow futures jumped from 280 points before the release to more than 600.  The Dow and S&P have largely erased their pandemic losses with the Dow down 5.92% on the year and the S&P 500 off 2.59% before the market open on Friday.

The dollar gained after the release initially rising about 30 points versus the euro  and about 50 against the yen. Over the past three weeks the dollar has surrendered all of its pandemic risk-premium and is trading at pre-crisis level in all the major pairs. 

Treasury yields spiked following the news with 10-year surging above 0.9%  and the 2-year scaling  0.2%. 

National impact

The economic collapse and the seemingly endless string of negative superlatives in economic statistics from the labor market, retails sales, durables good and soon to come second quarter GDP brought on by the imposed economic shutdowns has upended normal life in the United States.

Early concerns that the food supply chain might crack as people hoarded food and transport workers were unavailable to ship produce and goods to markets have proved to be false. Except for a few early instances of stripped supermarkets and distancing regulations food shopping has been unaffected.

Even though all states have lifted their shelter-in-place orders, many businesses remain closed and restrictions still limit social gatherings.

The states that reopened their economies first, Georgia, Texas and Florida have seen no appreciable rise in coronavirus cases or fatalities but despite those examples states on the coast, California and New York for example remain under modified closure orders with large swatch of their commercial life still closed.

 

 

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD holds above 1.0700 after US inflation data

EUR/USD holds above 1.0700 after US inflation data

EUR/USD stays in the lower half of its daily range but continues to trade above 1.0700 in the early American session on Friday. The data from the US showed that the annual Core PCE Price Index declined to 4.9% in April as expected, making it difficult for the dollar to gather strength.

EUR/USD News

GBP/USD trades above 1.2600 as dollar struggles to find demand

GBP/USD trades above 1.2600 as dollar struggles to find demand

GBP/USD clings to daily gains above 1.2600 and remains on track to end the week in positive territory. The greenback struggles to attract investors after the data from the US showed that PCE inflation softened in April. 

GBP/USD News

Gold pulls away from daily highs, holds above $1,850

Gold pulls away from daily highs, holds above $1,850

Gold has lost its traction in the second half of the day on Friday and declined toward the $1,850 area. The benchmark 10-year US Treasury bond yield staged a modest rebound on the US PCE inflation data, not allowing XAU/USD to preserve its bullish momentum.

Gold News

Terra’s LUNA 2.0 support expands with Binance and Kraken welcoming the airdrop, here’s how you need to prepare

Terra’s LUNA 2.0 support expands with Binance and Kraken welcoming the airdrop, here’s how you need to prepare

Terra’s LUNA fork proposal has passed with 65.5% votes, Revival Plan 2 in action without algorithmic stablecoin UST. LUNA price could wipe out losses incurred by holders in the colossal crash of LUNC and UST. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures