Economic Data Deluge

Looking at today’s Employment Situation from the U.S. Bureau of Labor Statistics (BLS) non-farm payrolls feels like ripping off a bandaid: it’s going to be painful, but you’ve got to get through it in order to heal. The headline figure for March was worse than just about anyone expected (though, in fairness to analysts, nobody knew how to chart these waters) at a loss of 701K jobs for the month. The Unemployment Rate rose 90 basis points to 4.4% from an unrevised 3.5% in February.

This ends a nearly 9 1/2-year run of positive employment data from the BLS, going back to September 2010. Yet analysts now caution that we have yet to see the worst of this — the sample date from March was actually prior to when the real fallout from anti-coronavirus tactics — stay-at-home orders, etc. — took place. Thus, bad as pulling this bandaid off fells this morning, we’ve got bigger ones to remove in the months to come.

The biggest loss came, to the surprise of no one, in the Leisure/Hospitality space. This had been one of the top-performing industries in these monthly BLS reports for the past few years, but now we see a precipitous drop: -459K jobs in March. By comparison, Retail lost 46K jobs in the same survey. Overall the private sector hemorrhaged 713 positions, while the federal government added 18K, likely to do with census provisions.

Average Hourly Earnings did rise more than expected last month, by 11 cents per hour, or 0.4%. This, however, may be a result of low-level employees being let go initially and taking up a large share of the 701K lost positions. Only after we reach a new, lower equilibrium in this data will we be able to reflect meaningful month-over-month changes.

Now attention turns to federal laws to relieve small and medium businesses (fewer than 500 employees) by way of the Paycheck Protection Program (PPP), which opens today. Companies will now be able to apply for loans (a week from today for self-employed workers and independent contractors) and receive grants to keep their businesses from shutting and their workforce from losing their jobs. In fact, tied into the program is loan forgiveness tied directly to re-hiring staff at maintained salary levels.

This large rollout — worth $349 billion — is likely to have a few hitches along the way. As the pay-outs are designed to come from the banks, only those wishing to participate in this program will dole out the money. If, like in JPMorgan Chase’s JPM case, there are too many variables to get on board, this would create problems for those businesses that bank at Chase. Also, it may not be clear to many of those applying for PPP that this would make them ineligible for the CARES Act, which pays out $1200 recovery rebates on advanced tax refunds.

Market futures have been swinging up and down to a notable degree this morning. Call them roughly even ahead of the opening bell, but with plenty of volatility expected as the day goes on. We’ve also seen investors become more risk-averse as Friday trading moves along, unwilling to be holding the bag over the weekend, should more bad news come out.


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