• Payrolls shed 20.5 million positions, two decades of job creation lost.
  • 14.7% unemployment better than the 18% forecast.
  • Layoffs highest in leisure, travel and hotel industries, construction and manufacturing follow.
  • Better than predicted NFP leaves markets largely unchanged, equity futures, bond yields and dollar higher.
  • “Good progress” on China trade implementation may have helped blunt impact.

The US labor market collapse in April surpassed all previous records for job losses but markets have already turned to the future as reopening states spur economic revival hopes.

Payrolls and unemployment

Payrolls dropped by 20.5 million, less than the 22 million estimate and the unemployment rate soared to 14.7%, the highest since 1939 at the end of the Great Depression and just before the Second World War rearmed the US economy.  

The so-called real or underemployment rate (U-6), which includes people not actively looking for work, surged to 22.8% from 8.7% in March.  Many furloughed workers hope to return to their jobs in the next few months and others are being paid while at home, with neither group searching for a new job they are not counted in the standard unemployment rate (U-3).

Seven weeks of soaring initial jobless claims and Wednesday’s 20.2 million plunge in ADP’s private sector payrolls helped prepare markets for the catastrophic losses brought on by the extensive nationwide business closures. 

Initial claims and China trade

The scheduled reopening of the economics of several states also point to a potential more widespread revival and returning employment.

“Good progress” on implementation of the US-China trade deal cited by American officials may also have aided market sentiment. Prior to the coronavirus pandemic the agreement had been seen as a boon for the manufacturing sector and agricultural exports.

Dow and the future

Dow futures were up 284 points after the release as equites continued their recovery after the March 23rd low.  The dollar gained marginally against the majors and Treasury rates rose with the 2-year gaining six basis points to 0.135% and the benchmark 10-year adding  four to 0.669%.

The leisure and hospitality sector suffered the worst losses at 7.7 million workers, 5.5 million of those from restaurants and bars.


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