The latest Non-Farm Payrolls report revealed some concerning trends in the American labour market. The findings of the March report pointed to a 4.4 per cent jump in unemployment, which is the highest level on record since August 2017.
In comparison, the unemployment rate in February was still threading at the record-low of 3.5 per cent, which is why the consensus forecasts were expecting a more moderate deterioration to 3.8 per cent this month. However, the actual increase was much more significant.
US Unemployment Rate. Image source: TradingEconomics.com
The market was anticipating the loss of jobs to reach 100 thousand, but the NFP recorded the staggering 701 thousand lost jobs, which reflects the initial attempts by the US government to contain and prevent the spread of the coronavirus.
The report did not, however, cover the last two weeks of March when the jobless claims soared by nearly 10 million on the rapidly expanding coronavirus threat on the economy.
US Jobless Claims. Image source: TradingEconomics.com
That is why arguably, due to the incomplete Payrolls report for March and the yet unclear transition of the labour market into a new paradigm, the market did not react quite noticeably to the release of the data. The initial adverse impact was partially offset by Donald Trump’s comments on the oil price war (read more about it in the first section of the update) .
Meanwhile, the yield of the US 10-year Government Bond has started to fall once again compared to the relatively flat prices of gold and S&P 500. This indicates the falling pace of recovery.
US10Y vs Gold vs S&P 500. Image source: Trendsharks ©, created with TradingView.com
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