The U.S. economy shed a further 539K jobs in April, bringing the
number of jobs lost since the turn in labour market conditions in
January last year to 5.6 million. On the positive side, this was the
slowest pace of monthly job losses since October last year. The drop in
payrolls was better than the market consensus for a more dramatic 600K
decline on the month (though whisper number may have been slightly more
optimistic than that) and was a sharp improvement compared to the
downwardly revised 699K jobs lost the month before. However, given the
growing difficulty of displaced workers in finding new jobs, along with
the surge of 683K people into the labour force, the unemployment rate
surged to 8.9%, from 8.5% the month before.
The details of the report were somewhat less encouraging than
the headline number would suggest. The losses were equally split
between the services producing (-269K) and goods-producing (-270K)
sectors. The key catalyst for the improvement during the month was
public sector hiring, as government payrolls added 72K jobs due to 2010
Census hiring. At the industry level, the manufacturing sector (-149K)
continues to shed jobs at a fairly dramatic clip, while job losses in
construction (-110K), professional services (-122K) and retail trade
(-38K) remain brisk.
The strength in the payrolls survey was corroborated by the
household survey (conducted separately), and that report claimed that
the economy actually added 120K jobs, which is considerably better than
the payrolls survey. One caveat to this tidbit is the fact the
household survey is generally considered to be inferior to the
establishment (payrolls) survey and so we take its implication with a
grain of salt, especially since there was a bounce-back factor at work
given the 861K of job losses reported the month before. Also noteworthy
is the fact that 0.6% M/M drop in aggregate hours worked is much lower
than the 1.0% M/M drop recorded the month before.
Taken together, this was a very strong report as it suggests
that the pace of deterioration in the U.S. labour market may be easing.
Notwithstanding, it is clearly evident that labour market conditions
remain very dismal, and the growing difficulty of displaced workers in
finding new jobs will continue to place further upward pressure on the
unemployment rate, which is now at its highest level in over 25 years.
Nevertheless, with the U.S. government likely to add a further 1.5
million workers over the next year for the 2010 Census, there is hope
that conditions may improve over the coming months.