This morning’s Employment Situation Report from the Bureau of Labor Statistics for the month of April was, not surprisingly, grim. The headline unemployment rate (U3) moved to 14.7%, up from 4.4% the month before. The broader measure of labor underutilization (U6) moved to 22.8%, up from 8.7% the month before. Nearly 21 million jobs were lost in April, wiping out nearly a decade's worth of job gains. While all sectors lost jobs, the Leisure and Hospitality sector was impacted the most, unsurprisingly.
Both the headline unemployment rate and the number of jobs lost were at the low end of market expectations. It may be important to point out that the compilation was done in the middle of the month and, consequently, doesn’t reflect current conditions. Furthermore, the household survey, which provides unemployment rates, was also complicated by the virus and the response rate was unusually low.
Additional takeaways from the report
The labor force participation rate fell by 2.5%, which marginally reduced unemployment rates. The employment to population ratio fell to 51.7%, the lowest rate in the history of the series, which was started in 1948. The average hourly earnings surged $1.34 to $30.01, reflecting the loss of jobs concentrated in the lower-earning sectors of the economy, skewing the average up.
This is unprecedented territory for the economy, however, April numbers were in line with expectations. The initial surge in unemployment compensation claims is letting up somewhat, but next month’s report promises to be just as interesting as we get a better feel for the continuing turmoil in the labor markets.