As the market had anticipated, the pace of job losses in the U.S. economy slowed in April. According to a Labor Dept. report released May 8, U.S. nonfarm payrolls fell 539,000 in April, while the unemployment rate jumped from 8.5% to 8.9%.
The market consensus forecast had called for a 625,000 decline in payrolls and an unemployment rate of 8.9%, although the numbers had moderated after the release of the ADP employment estimate Wednesday.
Job losses remain concentrated in construction (down 110,000) and manufacturing (down 149,000). Service jobs dropped 269,000, despite a 72,000 rise in the government workforce.
The average workweek was unchanged at 33.2 hours, while average hourly earnings rose only 0.1%. However, the March job drop was revised to 699,000 from the 663,000 reported last month.
Is this the beginning of the end for the job market's slump? "We expect the unemployment rate to peak near 10% next spring, with another 1.5 million in job losses over the next six months," says S&P senior economist Beth Ann Bovino. "Overall, the report was a bit better than expected, which should provide a modest boost for markets."
"[W]ith the net 66,000 downward bump to February and March, the [April] figure was almost exactly as assumed, and perhaps a tad weaker given the 72,000 government job surge as Census hiring kicked in," wrote Action Economics economists in a website posting. "Today's data are consistent with our -3.0% second-quarter U.S. gross domestic product estimate, following the -6.1% first quarter figure that is poised for revision to the -5.7% area."
U.S. stock index futures, which had been strongly higher May 8 following the release of the results of the government's stress tests of 19 major U.S. banks, stalled after the payrolls report. The Dow was up 68 points, the S&P gained 8 points and the Nasdaq was 8 points higher in premarket action.