The closely watched monthly Employment report released this week contained the anticipated levels of historic job losses. Daily volatility in mortgage markets remained low, and the change in rates for the week again was small.
Friday’s Employment report revealed a massive loss of 20.5 million jobs in April, which was close to the consensus forecast. The unemployment rate jumped from 4.4% to 14.7%. For comparison, this rate was below 4.0% during all of 2019. The leisure and hospitality industry lost 7.7 million jobs, which was 47% of total positions. The most positive news may have been that 78% of the people who lost their jobs in April described their layoffs as temporary rather than permanent.
Filings for new Jobless Claims dropped from 3.8 million last week to 3.2 million this week, which was the lowest level since the middle of March. Typical readings before the outbreak were around 250,000. The US has lost over 33 million workers, more than 20% of the labor force, over the past seven weeks. It should be noted that differences in the data collection periods for the weekly reports on Jobless Claims and for the monthly Employment reports may lead to results that aren’t always directly comparable.
This week, the Treasury Department announced that it will be doing a record amount of borrowing this quarter to fund government spending, which has increased due to relief efforts to help offset the impact of the coronavirus. It also will be extending the average duration of government debt and will be launching a new 20-year bond on May 20.
Looking ahead, the coronavirus will remain the main focus. Investors will continue to watch for news about medical advances, Fed actions, government stimulus programs, and plans for reopening the economy. Beyond that, the Consumer Price Index (CPI) will come out on Tuesday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. Retail Sales will be released on Friday. Since consumer spending accounts for about 70% of all economic activity in the US, the retail sales data is a key indicator of the strength of the economy.
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