In April, the unemployment rate in the United States rose by 10.3 percentage points to 14.7%. This is the largest monthly increase in the history of data collection, which has been available since January 1948. The number of unemployed increased by 15.9 million in April to 23.1 million, the U.S. Bureau of Labor Statistics has announced.
Total employment in non-agricultural sectors (NFP) fell by 20.5 million in April. Negative changes in employment reflect the effects of Coronavirus pandemic (COVID-19) and efforts to stop it by closing the economy. Employment fell sharply in all major industrial sectors,
with a particularly high loss of jobs in leisure, recreation, entertainment, and hospitality businesses. In just one month, employment in these sectors fell by 7.7 million, or 47%. Almost three quarters of this fall occurred in food services and drinking places (5.5 million). The April decline in the number of jobs in one month is the largest in the history of NFP data publication and has brought employment in the US back to the levels we last saw in February 2011.
Meanwhile, average hourly earnings increased by 7.9% year-on-year. However, this is largely due to significant job losses among less well paid employees. Average hourly earnings increased by $1.34 to $30.01.
The markets reacted very calmly to the U.S. data. In a way, they did not differ too much from expectations and were even a little better. The EUR/USD exchange rate recorded slight fluctuations of about 25-30 pips. This is, therefore, a historic event, where the EUR/USD exchange rate is characterized by such low volatility with a record high change in NFP. Stock market indices have even risen, and investors were probably pleased that the data were not worse than the market consensus. The data for May should be much better. Futures for the main American indices seemed to be gaining about 1%. As a result, we could still wonder how much the stock prices would be diverging from the real economy, which may probably come out of the crisis much slower than indicated by the rebound of stock indices since mid-March.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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