08 May 2020

Employment Shuts Down in April

By Michael J. Bazdarich, PhD

“The cops are outside.” “How many?” “All of them.”—Terminator 2: Judgment Day

We empathized with the young John Connor when surveying today’s April payroll jobs data. No, not every job in the economy was lost last month. It just felt this way when jobs showed a 20 million decline in a single month. With mind-numbing declines like this, the interesting stories are where job declines were NOT precipitous. We’ll work through both the upside surprises and the carnage here, but duty demands that we first work through the headlines.

Private-sector payroll jobs declined by 19,520,000 jobs (-15.1%) in April, following losses of 842,000 jobs in March. We typically look at an “underlying” jobs measure that excludes the particularly volatile construction and retailing sectors. There’s not much use in doing that when the volatility in those sectors pales in magnitude next to the shutdown-related declines seen elsewhere. Still, for the record, this underlying jobs measure declined by 16,438,000 jobs (-15.6%) in April, following a 764,000 loss in March.

And we focus on private-sector jobs in order to look at the effects of “market forces,” but the March/April job declines had little to do with market forces and were more a response to government mandates. Government jobs were not completely shielded from these mandatory declines, with total government jobs declining 980,000 (-4.3%), federal jobs essentially unchanged (+1,000), state jobs down by 180,000 (-3.5%), and local government jobs down 801,000 (-5.5%). Both state and local education jobs declined more sharply than overall state and local government jobs.

In the naïve days of mid-March, we expected the COVID-19 effects to be felt mainly in leisure-oriented sectors: travel (passenger transportation), accommodations, recreation and food services. These sectors did lead the declines, with food services down 5,491,000 (-46%), recreation down 217,000 (-44%), accommodations down 839,000 (-41%) and travel down 328,400 (-28%). However, other sectors saw much larger declines than we would have guessed two months ago. Health care was down 1,432,000 (-8.7%), motor vehicles manufacturing was down 381,000 (-36%), and non-leisure sectors such as construction, manufacturing, and other services saw declines generally in the -5% to -9% range.

Where did jobs NOT decline precipitously? In computer and electronics manufacturing (-1.0%), grocery stores (-1.4%), courier and messenger services (zero change).

Interestingly, in the sectors where job losses were severe but not catastrophic, average workweeks were also down sharply, while in those sectors where job losses were huge, average workweeks were about unchanged. This contrast is not shocking, but it is worth mentioning.

Finally, average hourly earnings rose sharply in April, up 4.7% (non-annualized) for all workers and up 4.3% for production workers. This is a statistical mirage, reflecting the fact that lower-wage workers were more likely to be laid off than higher-wage workers in any particular place of business.

To summarize, this is a report worlds apart from anything anyone has seen before. It is useless even to chart the various changes, when pre-April growth becomes a flat-line in order for the chart to accommodate the declines seen in April.

It is some consolation to see the financial markets taking this news in stride. It really isn’t news given the pre-figures of these data that have been released over the last few weeks.

© Western Asset Management Company Ltd 2020. 当資料の著作権は、ウエスタン・アセット・マネジメント株式会社およびその関連会社(以下「ウエスタン・アセット」という)に帰属するものであり、ウエスタン・アセットの顧客、その投資コンサルタント及びその他の当社が意図した受取人のみを対象として作成されたものです。第三者への提供はお断りいたします。当資料の内容は、秘密情報及び専有情報としてお取り扱い下さい。無断で当資料のコピーを作成することや転載することを禁じます。
ウエスタン・アセット・マネジメント・カンパニーDTVM(Distribuidora de Títulos e Valores Mobiliários)リミターダ(ブラジル、サンパウロ拠点)はブラジル証券取引委員会(CVM)とブラジル中央銀行(Bacen)により認可、規制を受けます。ウエスタン・アセット・マネジメント・カンパニー・ピーティーワイ・リミテッド (ABN 41 117 767 923) (オーストラリア、メルボルン拠点)はオーストラリアの金融サービスライセンス303160を保有。ウエスタン・アセット・マネジメント・カンパニー・ピーティーイー・リミテッド(シンガポール拠点)は、キャピタル・マーケット・サービス(CMS)ライセンス(Co. Reg. No. 200007692R) を保有し、シンガポール通貨監督庁に監督されています。ウエスタン・アセット・マネジメント株式会社(日本拠点)は金融商品取引業者として登録、日本のFSAの規制を受けます。ウエスタン・アセット・マネジメント・カンパニー・リミテッド(英国、ロンドン拠点)は英金融行動監視機構(FCA)により認可、規制を受けます。当資料は英国および欧州経済領域(EEA)加盟国においては、FCAまたはMiFID IIに定義された「プロフェッショナルな顧客」のみを対象とした宣伝目的に使用されるものです。
業務の種類: 金融商品取引業者(投資運用業、投資助言・代理業、第二種金融商品取引業)
登録番号: 関東財務局長(金商)第427号
加入協会: 一般社団法人日本投資顧問業協会(会員番号 011-01319)