Unemployment Rate Surges to Highest on Record
Economic Report Monitor #31
May 8th, 2020
The first full week of May closes with the anticipated April employment situation report. The report was consistent with the ADP report with a decrease of 20.5 million jobs seen last month. The jobs lost forced the unemployment rate to increase at the highest rate ever to 14.7%, up 10.3%. As expected, the number of unemployed persons rose by 15.9 million as closures forced workers to stay home, but the amount of those reporting being only temporary laid off rose by 18.1 million, something positive to take from the report. Overall, only 544,000 more people reported being permanently laid off, a number that is small relative to the total jobs lost. A number of individuals also reported less hours instead of total job loss with about 5 million saying they "work part-time for economic reasons."
Job losses were lead by the leisure and hospitality sector which saw 7.7 million jobs cut. Retail trade was a bit far behind, losing 2.1 million, lead by clothing accessories stores, down -740,000, and motor vehicle and parts dealers, down -345,000. Manufacturing job losses were behind retail at 1.3 million and were concentrated in durable goods, a sector that other economic indicators have shown to be struggling. That sector saw -914,000 jobs eliminated compared to nondurable manufacturing job losses of -416,000. Interestingly, amid the job losses, the average hourly earnings for all employees increased by $1.34 to $30.01 as lower-paid workers were more likely to be laid off. This data point correlates with the trend in the unemployment rate by education level where more qualified workers were less likely to get laid off.
Wholesale trade inventories for March were also released as merchants were faced with a -5.2% decrease in sales. Inventories, in response, fell -0.8% as nondurable good inventories, down -2.7%, offset a slight bounce of 0.5% in durable good inventories. Most of the durable good inventory build was caused by the auto industry which saw a 4.4% increase in inventories. Nondurables also had an outlier with petroleum inventories down -35.0%; however, this did coincide with a -26.1% drop in sales. Most industry inventory-to-sales ratios were flat in March with the exception of machinery (2.76x to 3.01x), auto (1.63x to 1.98x), and apparel (2.18x to 3.00x). The lack of consumer demand in these industries could threaten the supply chain as retailers are likely to continue to cancel orders through the lockdown. It goes without saying that these stores will want the shutdown to end the most.
May 8th, 2020
The first full week of May closes with the anticipated April employment situation report. The report was consistent with the ADP report with a decrease of 20.5 million jobs seen last month. The jobs lost forced the unemployment rate to increase at the highest rate ever to 14.7%, up 10.3%. As expected, the number of unemployed persons rose by 15.9 million as closures forced workers to stay home, but the amount of those reporting being only temporary laid off rose by 18.1 million, something positive to take from the report. Overall, only 544,000 more people reported being permanently laid off, a number that is small relative to the total jobs lost. A number of individuals also reported less hours instead of total job loss with about 5 million saying they "work part-time for economic reasons."
Job losses were lead by the leisure and hospitality sector which saw 7.7 million jobs cut. Retail trade was a bit far behind, losing 2.1 million, lead by clothing accessories stores, down -740,000, and motor vehicle and parts dealers, down -345,000. Manufacturing job losses were behind retail at 1.3 million and were concentrated in durable goods, a sector that other economic indicators have shown to be struggling. That sector saw -914,000 jobs eliminated compared to nondurable manufacturing job losses of -416,000. Interestingly, amid the job losses, the average hourly earnings for all employees increased by $1.34 to $30.01 as lower-paid workers were more likely to be laid off. This data point correlates with the trend in the unemployment rate by education level where more qualified workers were less likely to get laid off.
Wholesale trade inventories for March were also released as merchants were faced with a -5.2% decrease in sales. Inventories, in response, fell -0.8% as nondurable good inventories, down -2.7%, offset a slight bounce of 0.5% in durable good inventories. Most of the durable good inventory build was caused by the auto industry which saw a 4.4% increase in inventories. Nondurables also had an outlier with petroleum inventories down -35.0%; however, this did coincide with a -26.1% drop in sales. Most industry inventory-to-sales ratios were flat in March with the exception of machinery (2.76x to 3.01x), auto (1.63x to 1.98x), and apparel (2.18x to 3.00x). The lack of consumer demand in these industries could threaten the supply chain as retailers are likely to continue to cancel orders through the lockdown. It goes without saying that these stores will want the shutdown to end the most.
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