NEW YORK (Reuters) - U.S. employers cut a smaller-than-expected 539,000 jobs in April, the smallest amount since October, according to government data on Friday that hinted at some improvement in the labor market and the recession-hit economy.
KEY POINTS: * The Labor Department said the unemployment rate soared to 8.9 percent, the highest since September 1983. * March’s payrolls figure was revised to show a decline of 699,000, compared with a previously reported drop of 663,000. * Job losses in February were bumped up to 681,000 from the previously estimated 651,000. * Analysts polled by Reuters had forecast non-farm payrolls dropping 590,000 in April. * The unemployment rate had been forecast to rise to 8.9 percent from 8.5 percent in March. * Since the start of the recession in December 2007, the economy has lost 5.7 million jobs, the department said.
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:
“The decline in employment has moderated though not so clearly in the private sector - a lot of the improvement is due to public government employment - but still it’s a sign that the economy is approaching bottom and the indications for May look much more favorable. Under the surface there are hints of less pronounced declines in many industries. The report is maybe less positive than it might have been, but it’s still positive. It’s all going to add to the conviction that the economy is approaching bottom.”
RUSS CERTO, MANAGING DIRECTOR, BROADPOINT CAPITAL, NEW YORK:
“The market is forward looking and realizes the onslaught of supply is behind us for the moment. We are seeing a little relief rally. I expect you might see some rate locking against the corporate calendar. And, the Street continues to distribute refunding issues that it already has on its books.”
CHRIS RUPKEY, CHIEF FINANCIAL ECONOMIST, BANK OF TOKYO/MITSUBISHI, UFJ:
“The economy doesn’t turn on a dime but it does look as if the pace of job losses is starting to slow from the turn of the year. You can make the case that the panic layoffs that we saw at the turn of the year are starting to ease. The government hired 72,000 people so private payrolls are not as good as we thought and certainly not as good as the ADP report led us to believe. We may have reached an inflection point where job losses start to diminish from this point going forward. The labor market may have seen its worst months for job cuts. It will be a slow healing process, but improvement is expected to come by mid-year.”
RON SIMPSON, DIRECTOR OF FX RESEARCH, ACTION ECONOMICS, TAMPA, FLORIDA:
“The non-farm payrolls report is not much to write home about. The headline was better than expected and we did move higher on dollar/yen, but it’s down again. Although the headline was better than forecast, there were downward revisions to the previous two months. Overall, we can say that the jobs picture has probably bottomed in terms of the acceleration in job losses. But once the market digests this, the market will realize that it’s pretty much status quo.”
JAY MUELLER, SENIOR PORTFOLIO MANAGER, WELLS CAPITAL MANAGEMENT, MILWAUKEE, WISCONSIN:
“The nonfarm payrolls number wasn’t too far off consensus, maybe a little better than expected, but pretty much in line with the whisper number.
“It’s a terrible number but an improvement relative to the very terrible numbers we had before. The big question is has the peak in job losses hit? I am somewhat skeptical that we have seen the absolute worst of it, but you can’t rule that out. By the time we get through with this, I think the unemployment rate will be close to 10 percent. The government hired a lot of people.”
“The payrolls were kind of to be expected given the ADP report. If you look at the bond market it looks like they are paying more attention to the unemployment rate, which rose to expectations. You had the revision to the previous month as well, which is also a factor. Government (jobs) rose also, which is not good for the private sector.”
DUSTIN REID, DIRECTOR FX STRATEGY, RBS GREENWICH CAPITAL MARKETS, CHICAGO:
“Given the private ADP reading earlier this week and some very optimistic whisper numbers flying around, the report reads a bit disappointing. Many in the Street were expecting for a number closer to 500,000 and add to that a couple of revisions in prior months and a higher unemployment rate. Overall, I don’t expect a material reaction in the forex markets solely based on this report. The performance of equities later today in the wake of the stress tests may have a bigger impact on how currencies trade.”
SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:
“The losses were less than consensus and the stress test also went reasonably well. The market should move reasonably upward throughout the day, but that will fade next week as we stop wondering if the economy is getting less bad, and start focusing on if it is getting better.
“The data may be a trend in that many companies cut their costs in an unprecedented way in the fourth quarter and in the first quarter. That cost cutting will abate as many companies have stabilized their cost structure. Until we start seeing revenue growth, however, we’re not going to see people getting hired again.”
GEORGE DAVIS, CHIEF FOREIGN EXCHANGE TECHNICAL ANALYST, RBC CAPITAL MARKETS, TORONTO:
“On the face of it looks like a good headline number. The only small caveat would be the revision in the February number but on a net basis would still lean toward a stronger than expected outcome. Implications for the dollar right now, with the whole risk aversion theme, this is likely to be positive for equity markets which would argue for the U.S. dollar to weaken off the data.
MARKET REACTION: STOCKS: U.S. stock index futures hold gains after data. BONDS: U.S. Treasury debt prices extend losses. DOLLAR: U.S. dollar little changed.