The bar was set high for today’s Nonfarm payrolls figure after March saw the economy add nearly a million jobs and the gradual economic reopening appeared to be pulling people back to work, especially in the hospitality sector.
When April’s figure showed a scanty 266k jobs added and unemployment rising to 6.1%, the market reaction highlighted just how high that bar was set. To add insult to injury, the March figure was revised back to 770k down from 916k. The US dollar saw an immediate drop across the board, with EURUSD ripping over 0.65% higher upon the announcement, while US Treasury yields dramatically fell across the curve, with the 10-year yield suffering the largest loss.
The notable job gains were seen in leisure and hospitality, other services, and local government education. Although they were partially offset by employment declines in temporary help services and in couriers and messengers, the fact that leisure and hospitality were among the gainers bodes well for job growth going forward.
With lockdown measures being gradually lifted, though not everywhere in the States, one unknown fear in markets was whether the labour gap would fill itself once the pandemic was over, or if scars to the labour market would be structural. The details of the report take away some of those fears, but markets shouldn’t draw conclusions from one month worth of data. On the one hand, the slowdown in the job gains could signal a more protracted labour market recovery and embolden dovish rhetoric by Fed officials, while on the other hand, the slowdown in employment gains could just be a blip in the longer-run trend of a speedy recovery. Markets will have to await further data to draw more solid conclusions.
EURUSD jumps above the 1.21 handle as US jobs data undershoots elevated expectations
Author: Ima Sammani, FX Market Analyst