- US dollar index rose after the Bureau of Labour Statistics released March NFP data.
- The economy lost more than 701k jobs in March while the unemployment rate rose to 4.4% from 3.5%
- The average number of hours and the average hourly earnings dropped and it could get worse
US dollar falls on disappointing NFP data
The US dollar rose after the Bureau of Labour Statistics (BLS) released the official nonfarm payrolls for March. The numbers showed that the economy lost about 701k jobs in March as the Coronavirus pandemic spread throughout the country. In contrast, the economy lost 651k jobs in the peak of the 2008/9 global financial crisis.
Dollar index rose after weak NFP data
According to the Bureau, the biggest casualty was the leisure and hospitality sector, which lost more than 459k. This is because many hotels, parks, and restaurants have shut down because of the disease. Other sectors that lost workers were manufacturing, construction, and mining.
The headline number was slightly higher than the median of 100k that was estimated by Bloomberg. Manufacturing payrolls dropped by 18k while private nonfarm payrolls declined by 701k.
The unemployment rate, which measures the number of people of working age who are not working, rose to 4.4% from the previous historic low of 3.5%. The U6, a more accurate number used to measure unemployment rate, rose to 8.7% from the previous 7.0%. This number measures the number of people working part time for economic reasons. The participation rate declined from the previous 63.4 to 62.7.
Meanwhile, most working people worked for less hours as companies started to embrace the concept of remote working. Many companies are also trying to preserve as much cash as possible. The data today showed that the average weekly hours dropped from the previous 34.4 to 34.2 while wages had a monthly gain of 0.4% and an annualized gain of 3.1%.
US employment situation worsening
The numbers released came a day after we received the disappointing jobless claims numbers. According to the Labour Department, more than 6.6 million Americans filed for unemployment insurance in the previous week. This was the highest number ever recorded. It was also higher than the 3.2 million that was reported in the previous week. In total, more than 10 million Americans filed for unemployment insurance in March.
Still, there is a sense that the worse is yet to come. For example, yesterday, Boeing (NYSE: BA) announced voluntary buyout for more than 161k employees. On the same day, Disney (NYSE: DIS) announced that it was suspending thousands of its employees who were not necessary. Most of these employees are in its parks division that is not operating.
The same happened at General Electric (NYSE: GE), which furloughed half of its employees at its General Electric Aviation division. Other companies especially those in the entertainment and cruise business have also announced similar measures. More so, Florida announced a state wide lockdown as the number of Coronavirus cases continued to rise.
All these numbers were not captured in the March jobs report. This means that the situation will likely be significantly worse in the April jobs report that is scheduled for May, 8. The chart below shows how the NFP data was at the height of the past financial crisis.
US NFP data during the last financial crisis