Economists React: Jobs Report Is ‘Less Bad’
Economists and others weigh in on the smaller-than-expected decline in U.S. payrolls and the increase in the unemployment rate.
- We remain cautious on the employment front, as job losses typically continue for 3-6 months after the trough of economic output. That suggests a peak in joblessness towards the end of the fourth quarter 2009, a peak which would cap off two full years of consistent monthly payroll declines… There’s some hope at the end of the rainbow, but the economy will keep busy hunting down the leprechaun for a few more months before we get there. –Guy LeBas, Janney Montgomery Scott
- Many are interpreting the April employment report as yet another sign that the economy is “stabilizing,” but the more accurate interpretation of these signs is that the economy’s pace of contraction is slowing, which is not quite the same as stability and s still a long way from the economy actually improving. –Richard F. Moody, Forward Capital
- This is less bad than the 690,000 average in February and March, and both manufacturing and service losses slowed, but it is hardly a triumph or even a stabilization. It is terrible, as is the rise in the unemployment rate to 8.9% from 8.5%. Soaring unemployment is depressing wage gains… There’s much further to go here; seriously bad news because without wage gains people can’t deleverage unless they cut spending deeply. –Ian Shepherdson, High Frequency Economics
- The details of the report were somewhat less encouraging than the headline number would suggest. The losses were equally split between the services producing and goods-producing sectors. The key catalyst for the improvement during the month was public sector hiring, as government payrolls added 72,000 jobs due to 2010 Census hiring… Taken together, this was a very strong report as it suggests that the pace of deterioration in the U.S. labor market may be easing. Notwithstanding, it is clearly evident that labor market conditions remain very dismal, and the growing difficulty of displaced workers in finding new jobs will continue to place further upward pressure on the unemployment rate, which is now at its highest level in over 25 years. –Millan L. B. Mulraine, TD Securities
- The report is consistent with the notion that the pace of deterioration is slowing but we are still a long way from the point of stability in both the labor market and the broader economy. About 500,000 individuals will eventually be hired for a short period of time to conduct the 2010 Census. Most of these workers will show up in the payroll tally next spring and disappear by the late-summer or fall. However, because of controversy surrounding the accuracy of past census efforts, the government has implemented a special program to confirm residential addresses ahead of time. This resulted in 63,000 federal government hires in April and indications are that another 80,000 or so are likely to be hired for this task over the next few months. There is no indication of how long these workers will be needed. In any case, this is an important distortion that should be excluded from the payroll tally. Thus, the census-adjusted payroll result for April was -602,000. –David Greenlaw, Morgan Stanley
- Federal government employment was boosted by 66,000 due to hiring related to the decennial census to be conducted in 2010. Because this gain is unlikely to be repeated in subsequent months, the headline nonfarm payroll figure offers a misleading indication of the new trend in employment. We still believe the U.S. labor market is at an inflection point, but today’s employment report suggests the improvement may prove more gradual than we had hoped. –Nomura Global Economics
- Taking into account the downward revisions to the prior months and the sharp increase in government employment, this is a weaker-than-expected report… Relating this report to the bank stress tests, the unemployment rate in April is already at the “alternative more adverse” average level assumed for the 2009 (and the rise in the insured unemployment rate since the April employment survey week suggests that if surveyed at the end of the month, the unemployment rate would probably be 9% or higher). –RDQ Economics
- Sectoral shifts in the job market are becoming evident as private sector job gains are limited to secular growth areas such as education & healthcare while actual job gains are centered in the federal government. –John Silvia, Wachovia Economics Group
- Given that the overall rate of decline in economic output is moderating from the 6% plus plunges recorded in the fourth quarter of 2008 and first quarter of 2009, it is natural for nonfarm payrolls (which are a coincident economic indicator) to also start to drop at a lesser pace than seen during the truly horrific November-March span. We thus expect the reported private sector job declines to diminish in coming months. With that said, we still seem to be some time from stabilization in employment conditions, and even further from sustained growth in payrolls. –Joshua Shapiro, MFR Inc.
- The massive hemorrhaging in the job market over the past four months has slowed and the worst is behind us. Job losses in most sectors slowed… Thanks to the economic stimulus program including innovative monetary policy, the economy could hit the bottom sometime around mid-year. The financial market has begun to stabilize and the credit flows throughout the economy are slowly improving… Even if the economy continues to show signs of improvement, businesses will cut jobs and trim fats to stay lean and mean in the immediate future. Employers want to make sure a sustained economic recovery is here before hiring. That time won’t come until sometime in 2010. –Sung Won Sohn, Smith School of Business and Economics
Compiled by Phil Izzo
No comments:
Post a Comment