• US NFP fell 20.5m in April

• The unemployment jumped from 4.4% to 14.7%

• Wage growth rose to 4.7% mom and 7.9% yoy

• Labor force participation rate plunges to 60.2%

• Covid-19 pandemic wipes out nearly all job gains of past decade

The US economy set new records in April for job losses and the unemployment rate, as the coronavirus pandemic took an enormous toll on economic activity throughout the country. Nonfarm payroll employment fell by 20.5m during the month. The change in total nonfarm payroll employment for February was revised down by 45,000 from +275,000 to +230,000, and the change for March was revised down by 169,000 from -701,000 to -870,000. With these revisions, employment changes in February and March combined were 214,000 lower than previously reported.

The leisure and hospitality sectors lost 7.7m jobs - nearly half of all employment in hotels, bars, restaurants, tourism, and travel - and those losses accounted for 37% of the total for the month. In other sectors, retail shed 2.1m jobs, manufacturing lost 1.3m and white-collar sectors saw 2.1m job losses. State and local governments also started cutting back, with a nearly 1m layoffs. And in what may seem odd during a health crisis, the medical sector lost 1.4m jobs as elective procedures were put on hold and Americans avoided the health care system whenever possible.

The unemployment rate jumped 10.3 percentage points to 14.7%, the highest since World War II. A broader measure of unemployment, the U-6 underemployment rate, rose to 22%. The number of unemployed persons who reported being on temporary layoff increased about ten-fold to 18.1m in April. The number of permanent job losers increased by 544,000 to 2.0m. The labor force participation rate fell to 60.2% in April - the lowest since January 1973. And the employment-to-population ratio dropped to 51.3%, reflecting the largest one-month decline and the lowest reading in US history. Average hourly earnings rose 4.7% mom and 7.9% yoy, skewed higher by the disproportionate loss of low-wage workers from payrolls.

Source: BIMB Securities Research - 12 May 2020