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US April non-farm payrolls +266K vs +1000K expected

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April 2021 non-farm payrolls report:

unemployment rate
  • Prior was 916K (revised to +770K)
  • Unemployment rate 6.1% vs 5.8% expected
  • Prior unemployment rate 6.0%
  • Participation rate 61.7% vs 61.6% expected (was 62.8% pre-pandemic)
  • Prior participation rate 61.5%
  • Underemployment rate 10.4% vs 10.7% prior
  • Average hourly earnings +0.7% m/m vs 0.0% expected
  • Average hourly earnings +0.3% y/y vs +4.2% expected
  • Average weekly hours 35.0 vs 34.9 expected
  • Two month net revision -78K
  • Change in private payrolls +218K vs +933K expected
  • Change in manufacturing payrolls -18K vs +54K expected
  • Long-term unemployed at 4.2m vs 4.2m prior
  • The employment-population
    ratio, at 57.9% vs 57.8% prior (61% before pandemic)
  • Full report

This is a big surprise. The economy re-opened in a big was in April and other indications showed much better hiring than this. The revision to March is also troubling.

“In April, notable
job gains in leisure and hospitality, other services, and local government education were
partially offset by losses in temporary help services and in couriers and messengers,” the report said.

The other thing that sticks out for me is goods production with mining +2K, construction +3.8K and manufacturing -18K. That’s bizarre considering the boom in all those spaces.

The dollar is suffering on the headlines and rightfully so with 10-year yields quickly down 10 bps initially and now 6 bps to a one-month low at 1.50%. Equities love it because it means cheap money and lower rates, with Nasdaq futures up 1.1%. Gold has tacked on another $20 as the run continues.

There’s a bit of disbelief around this number. I wonder if this is a game-changer and shifts the conversation towards the Fed’s baseline about rates staying very low for a very long time along with only-transitory inflation.

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