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Payrolls Shock: Only 266k Nonfarm Jobs Added in April, vs 978k Expected

Economic IndicatorsMay 07, 2021 08:37AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- The U.S. economy created far fewer jobs in April than estimated, casting doubt over the strength of the economic recovery. 

The Labor Department said only 266,000 net nonfarm payrolls were added through the middle of last month, compared to expectations for a number just under 1 million. In addition, the March payrolls gain was revised down by a whopping 146,000 to 770,000.

The unemployment rate rose to 6.1% of the workforce from 6.0% in March. Analysts had expected it to fall to 5.8%.

There was no indication as to why the government's data were so starkly at odds with other evidence in recent days and weeks suggesting a more vigorous recovery. Data collection for ADP's private-sector hiring survey generally has the same cut-off date as the government's, and ADP had reported a net increase of 742,000 private-sector jobs in the month, compared with the government's estimate of only 218,000. 

According to the Bureau of Labor Statistics, manufacturing payrolls fell by 18,000 month-on-month, something that stands at odds with the ISM's monthly survey, whose employment index has been well above the 50 level that separates growth from contraction all year.

Some economists, at least, were skeptical of the figures' accuracy.

"Ignore the hot-takes and emails dissecting the data. Just put on your steepener and clock out for the weekend," said Robin Brooks, an economist with the Institute for International Finance in Washington, DC. "This negative NFP surprise is just noise and doesn't invalidate for a second that U.S. GDP is booming hugely."

A steepener is a trade that bets on shorter-dated bonds outperform longer-dated ones, reflecting expectations of higher inflation at a time of low official interest rates.

Market reaction to the news was abrupt, as cyclical stocks, oil and bond yields all headed lower.

However, Nasdaq futures gained on expectations that the Federal Reserve will resist any temptation to consider easing off on its asset purchases this year. Earlier this week, Dallas Fed President Robert Kaplan had become the first senior Fed official to suggest that the time to discuss tapering bond purchases had already arrived.

For the Fed, we suspect that means it will be a many months before it judges the economy has made “substantial further progress” towards its “broad based and inclusive” full employment goal," Michael Pearce, senior economist with Capital Economics, said in a note to clients. "That means any talk of tapering, let alone rate hikes, is still some way off."

By 8:50 AM ET (1250 GMT), Dow Jones futures, which have outperformed in recent weeks as ‘reopening trades’ have brought beaten-down cyclical names back into fashion, were down 0.1%.

 

 

Payrolls Shock: Only 266k Nonfarm Jobs Added in April, vs 978k Expected
 

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Comments (50)
Larry DeAngelis
Larry DeAngelis May 08, 2021 8:43AM ET
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If the news came across the wire "Armageddon" CNBC would have someone come on to say " buy stocks"
Wrongway Whiplash
Wrongway Whiplash May 08, 2021 2:50AM ET
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lol.. same sad club.
Dave Jones
Dave Jones May 07, 2021 4:12PM ET
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guess all the uber Starbucks and McDonald's jobs have been filled. All the stimmy cheques have gone to China. I feel sorry for the people at America. you were strong enough in 1776 you need to grow a pair and do it again...
Dionte Edwards
Dionte Edwards May 07, 2021 1:40PM ET
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How about enforcing hiring quotas for companies that recieved ppp loan assistance or pay little to no federal taxes.
Tre Hsi
Tre Hsi May 07, 2021 12:11PM ET
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well president orange son in law Jared Kussher did say a year ago that by July the US economy will be rocking again, naturally everyone assumed he meant July-2020, but now we know he meant July-2021..........or is it July-2022?
Julio AXA
Julio AXA May 07, 2021 11:49AM ET
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QE = BIG CORRUPTION. MONEY LAUNDRY THE FED AND BIDEN GOV. Punishment they are
Julio AXA
Julio AXA May 07, 2021 11:46AM ET
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we want a real market, no fake and manipulation
Julio AXA
Julio AXA May 07, 2021 11:45AM ET
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this corruption this manipulation, fake market. look how dow and gov america wanna look gokds, he junk, he fake. punishment powell and yellen now.
George Pichurov
George Pichurov May 07, 2021 11:40AM ET
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ANd the stocks skyrocket. Maybe we need new economics laws.
Isaac Otabil
Isaac Otabil May 07, 2021 11:20AM ET
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did you that , I unemployment claims drop & I was mortar the trade very will
Ominous Owl
Ominous Owl May 07, 2021 11:17AM ET
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After this Biden: "Our brothers & sisters are unemployed. We can't let this happen." > Infrastructure bill. Sounds timely?
Adam Paine
Adam Paine May 07, 2021 9:53AM ET
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How did unemployment claims drop yesterday then?
Adam Paine
Adam Paine May 07, 2021 9:44AM ET
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Bad news=good news. Good news=great news. Nothing can touch our market corruption and greed.
James Johannsen
James Johannsen May 07, 2021 9:43AM ET
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this is worth a 400 point gain in the fed bought markets today
Adam Paine
Adam Paine May 07, 2021 9:43AM ET
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sure, because this clearly shows that QE fixes unemployment. 👎
vince smith
vince smith May 07, 2021 9:42AM ET
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Have a look around at all the for hire signs, they are everywhere. Why work when you live in a Marxist utopia , getting payed to stay home.
Adam Paine
Adam Paine May 07, 2021 9:42AM ET
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It's the same with the markets. Why stop investing in over valued stocks when the FED is needlessly pumping over a Trillion a year in. QE has nothing to do with job creation.
Cameron Ericksen
Cameron Ericksen May 07, 2021 9:41AM ET
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not sure why this is a shock. look at all the stories on companies struggling to find labor. seems about right to me. the shocking part is that economists think this is an anomaly. don't worry though tons of government intervention coming to fix this actual economic news.
Catholic Man
CatholicMan May 07, 2021 9:40AM ET
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It’s safe to say we all miss Trump.
Tre Hsi
Tre Hsi May 07, 2021 9:40AM ET
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what did you miss?  the constant Twitter feuds?  the non winnable trade wars?  the ever increasing trade deficit? the *******covid death?  the 2 covid relief bills totalling $3T?  the race riots?  federal budget deficits?
Mitchel Pioneer
Mitchel Pioneer May 07, 2021 9:39AM ET
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And the laughingstock of the financial world "rallies" out of another loss. Fraudulent, criminally manipulated joke.
Scott Bailey
Scott Bailey May 07, 2021 9:25AM ET
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Payroll shock???? Biden is paying everyone to stay home, whats the shock?!!!!!
Mark Brovchuk
Mark Brovchuk May 07, 2021 9:25AM ET
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they are just wasting their breath with all those news
Mark Brovchuk
Mark Brovchuk May 07, 2021 9:25AM ET
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Yellen was giving a signal and Powell has conformed it yesterday in his commentary here. The policy doesnt work, actions needed
Jose Soberanes
Jose Soberanes May 07, 2021 9:24AM ET
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The incompetence of this administration is in full view..
Tony Sir
Tony Sir May 07, 2021 9:17AM ET
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the problem is is the only people that are out of work or in the hospitality and food business and they do not want to go work in any other industry. rather they are content with receiving benefits until everything opens. and yet many other small businesses in desperate need of employees are searching and are getting no interest from the public so this is a very weird time which could come crashing if something doesn't change in that regard
Craig Warren
Craig Warren May 07, 2021 9:12AM ET
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Few want to work. I own a small business and my wife and I own a second small business, we employ about two dozen people. The issue is we can't find people that want to work, and most sitting home pulling government money out of our back pocket. when you offer people to make $40 to $60,000 a year and they say "No, I get $850 a week now, It's not worth the difference to start working again" it says something about the economy.
Tony Sir
Tony Sir May 07, 2021 9:12AM ET
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I 100% agree with you as I'm in the same boat and a lot of businesses around me a crying the same thing
Mark Brovchuk
Mark Brovchuk May 07, 2021 9:12AM ET
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see, the monetary policy only makes things for economy worse
Hunt Richardson
Hunt Richardson May 07, 2021 9:11AM ET
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once again the predictions of the so-called experts are totally wrong. can you imagine running a company like this?
Oil Bear
Oil Bear May 07, 2021 9:05AM ET
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Useless fed monetary policies?:
 
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