Chief Economist Scott Brown discusses the latest market data.
The April Employment Report was flawed, but signaled a sharp deterioration in labor market conditions. Nonfarm payrolls fell by 20.5 million, nearly erasing all of the job gains since the last recession. The unemployment rate rose to 14.7%, but the Bureau of Labor Statistics noted that a classification problem reduced the figure by five percentage points (in other words, it should have been closer to 20%). The employment/population ratio fell to 51.3% from 60.0% in March and 61.1% in February. Average hourly earnings jumped 4.7%, reflecting the high losses of lower-paying jobs.
In other news, unit motor vehicle sales fell 24.5% in April, to an 8.6% seasonally adjusted annual rate (vs. 11.4 million in March and 16.8 million in February). The ISM Non-Manufacturing Index fell to 41.8 in April (vs. 52.5 in March), but the headline figure was boosted by a virus-related increase in supplier delivery times. Business activity, new orders and production fell sharply. Treasury indicated that it would borrow nearly $3 trillion in the April-June quarter.
Next week, claims for unemployment benefits are expected to fall further, but the level has remained elevated. The figures should show about 20% of workers (one in five!) filing a claim over the last eight weeks. Retail sales are expected to have fallen further in April. Unit auto sales fell and gasoline prices dropped. However, the Bureau of Census is tweaking the seasonal adjustment on the fly, added uncertainty. Industrial production should post a sharp drop. Aggregate manufacturing hours (from the employment report) were reported to have fallen 17.9%. Inflation reports are expected to reflect lower gasoline prices, but may be a bit mixed otherwise.
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Consumer Money Rates
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|Dollars per British Pound||1.236||1.301|
|Dollars per Euro||1.083||1.119|
|Japanese Yen per Dollar||106.28||110.10|
|Canadian Dollars per Dollar||1.397||1.348|
|Mexican Peso per Dollar||24.061||19.086|