The US economy ceased producing jobs in net terms as infection controls began to be implemented in March. The unemployment rate had been around 3.5% but that changed in March 2020 when job losses began to surge and the rate increased by almost a full percentage point. The latest employment report indicates the full force of restrictions on the US economy has now been felt.
According to the US Bureau of Labor Statistics, the US economy lost a staggering 20.5 million jobs in the non-farm sector in April. The drop in employment was largely in line with the median expectation. Employment figures for February and March were revised down by a total of 214,000.
April’s unemployment rate increased in a ballistic fashion from March’s rate of 4.4% to 14.7%. The total number of unemployed expanded by 15.938 million to 23.078 million while the total number of people who are either employed or looking for work decreased by 6.431 million to 156.481 million. The fall in the number of people in the labour force significantly lowered the participation rate from 62.7% to 60.5%.
ANZ economist Hayden Dimes said, “The US labour market is very flexible, for good and ill, shedding and adding jobs at a bewildering pace.”
US Treasury yields increased moderately on the day. By the close of business, US Treasury 2-year bond yields had gained 2bps to 0.15%, the 10-year yield had increased by 5bps to 0.69% while the 30-year yield finished 4bps higher at 1.38%.
ANZ’s Dimes noted “a decade’s worth of job-creation” had been lost and “May is likely to see more job losses regardless of the path of the pandemic.”
One figure which is indicative of the “spare capacity” of the US employment market is the employment-to-population ratio. This ratio is simply the number of people in work divided by the total US population. It hit a low in October 2010 at 58.2% before slowly recovering to just above 61% in late-2019. April’s reading fell from 60.0% to 51.3%, its lowest reading in the period from 1948 to the present.