Thursday, May 07, 2020

April Employment Preview

by Calculated Risk on 5/07/2020 12:48:00 PM

Important Notes:
1. Watch for Special Notes in the release. There are many questions this month (the BLS will do a great job explaining how they handled a number of issues).
2. The 2020 Decennial Census was expected to increase hiring in April. Most of this hiring has been delayed.
3. Ignore wage growth. Since many low paid employees have been let go, average wages will increase significantly. This is meaningless.

On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for a decrease of 21,000,000 non-farm payroll jobs, and for the unemployment rate to increase to 16.0%.

Last month, the BLS reported 701,000 jobs lost in March and the unemployment rate at 4.4%.

The job losses in March were the eighth worst on record.   The worst was after WWII.  There will be a new #1 this month - and losses will be an order of magnitude worse than in Sept 1945.

Worst Monthly Job Losses Since 1939
RankDateJobs Lost (000s)
1 Sep-45 -1,959
2 Oct-49 -838
3 Mar-09 -800
4 Jan-09 -784
5 Feb-09 -743
6 Nov-08 -727
7 Dec-08 -706
8 Mar-20 -701
9 Apr-09 -695
10 Jul-56 -631

Goldman Sachs economists wrote this morning: "We left our April nonfarm payroll estimate unchanged at -24,000k (mom sa) ahead of tomorrow’s report."

And Merrill Lynch economists wrote: "We forecast 22 million in nonfarm payroll losses and a massive spike in the unemployment rate to 15% from 4.4% in March."

The usual indicators are somewhat useless this month.  They are signaling huge jobs losses, but we've never seen anything remotely close to the job losses that happened in April.

• Conclusion: The number of jobs lost in April will be huge.   And there will be many more jobs lost in May and June.  The Payroll Protection Program in the CARES act only pays for eight weeks - and then many of those employees will lose there jobs if the program isn't extended.  So those will be likely job losses in June or July.