Skip to main content

Markets react to big US jobs miss

What a difference a year makes with an effective vaccine rollout. This time last year US non-farm payrolls recorded its largest ever decline on record with over 20 million dropping out of the workforce in the month of April 2020 as the economy ground to a sudden stop.

Thursday, May 6, 2021

What a difference a year makes with an effective vaccine rollout. This time last year US non-farm payrolls recorded its largest ever decline on record with over 20 million dropping out of the workforce in the month of April 2020 as the economy ground to a sudden stop. Fast forward to today and the employment change last month saw only 266 thousand people (re)join the jobs market. This was a huge miss against expectations of nearer to one million new jobs priced into markets. One needs to bear in mind that with these disappointing numbers, the unemployment rate in the US rose marginally to 6.1% and total payrolls are still circa eight million lower than they were in February 2020. So, this is still a long way away from the Federal Reserve thinking about raising rates, despite what the US Treasury Secretary, Janet Yellen, may have misspoken about this week. The bond market is instantly reacting to surprising numbers with yields falling on the 10-year Treasury to 1.5%. Pre-pandemic unemployment levels of sub 3% are not expected to be met on the current trajectory until well into next year, if not later, and that is assuming the coronavirus is still successfully restrained. So, the goldilocks scenario of cheap money, in a now slower recovering jobs economy, continues for the time being.

Important legal information
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. Allocations and holdings are subject to change.

Charles Hepworth

Investment Director
My Insights

Active Thinking

Fed wary of cutting US rates too quickly

Charles Hepworth

UK services sector continues to expand

Charles Hepworth

UK retail sales bounced back strongly in January

Charles Hepworth

Charles Hepworth Blog