Market Matters
This week we saw employment data come out, which was as bad as the market was anticipating. U.S.-China rhetoric was toned down in overnight reports Thursday, leading to optimism in domestic equities. We are still seeing the same range we have seen since March within 0.54%-0.78%, and we are right in the middle of that range today with the 10-year at 0.66%.
Nonfarm Payrolls
Nonfarm payrolls for April declined by -20.5mln, with private payrolls down -19.52mln, which are now both all-time records for a single-month. Two net revisions for February and March also took off another -214k, specifically with March now at -870k from the originally reported -701k. Within the headline here for April, the biggest hit was to leisure and hospitality, which lost -7.7mln jobs. Following was education and health services, down -2.5mln, while professional and business services, and retail, saw drops of -2.1mln each. Manufacturing declined by -1.1mln, with government down -980k, construction down -975k, and transportation down -584k.
Weekly Jobless Claims
In the week ending on May 2nd, 3.169mln people filed for unemployment insurance, which is down -677K from the prior week's upwardly revised 3.846mln. According to the Labor Department, the 7-week running total is now at 33.5mln, with the 4-week moving average down -861.5k to 4.173mln, suggesting a peak could be in place now. Continuing claims, which lag a week, rose 4.636mln to 22.647mln from an upwardly revised 18.011mln. The seasonally adjusted insured unemployment rate rose to 15.5% from 12.4%, surpassing last week as a new record-high (the previous record high was 7.0% in May 1975). Looking ahead to the April nonfarm payrolls report, expectations from the street come in around a -20mln headline decline, with an unemployment rate of 14.9%. To put this number in context, this would beat the previous record decline of -1.959mln, which was seen following the end of World War II in September 1945.
ADP Employment Report
The ADP Employment Report for April showed a loss of -20.235mln private payrolls, which is right in-line with expectations, and much worse than the previous record of -835k set back in February 2009. Also to note, March’s print was revised down from a -27k to -149k, normally a very large number in pre-virus conditions. Within the April data, goods-producing industries saw net payrolls down -4.229mln, with losses of -2.477mln in construction, and -1.674mln in manufacturing. Service-providing industries lost the other -16.007mln with declines of -8.607mln in leisure and hospitality, -3.44mln in trade/transport/utilities, -1.298mln in ‘other’, -1.167mln in professional and business services, -1.12mln in administrative and support, and -999k in healthcare. Finally, looking by the size of firms, small businesses (1-49 employees) lost -6mln, mid-size (50-499) lost -5.269mln, and large (+500) lost -8.963mln.
ISM Non-Manufacturing Index
The ISM Non-Manufacturing Index fell -10.7 points to 41.8 for April. If we exclude the supplier deliveries index, which rose 16.2 points, the rest of the headline components show lower trends such as business activity down 22 points to 26, new orders down 20 to 32.9, and employment down 17 to 30, all record lows. The backlog of orders index dropped by 7.3 to 47.7, inventory was up 5.4 to 46.9, while exports dropped 9.6 to 36.3, and imports up 9.1 to 49.3. Respondents of the index commented that all sectors were directly or indirectly affected by the Covid-19 outbreak.
