On the evening of May 7, Beijing time, the United States released non-agricultural employment data for April, including: 266,000 new non-agricultural employment in April, with an expected 978,000, with an expected value of 770,000; the unemployment rate in April was 6.1%, with an expected value of 5.8%, with an expected value of 6.0%; the average hourly wage in the non-agricultural sector in April was US$30.17, with an expected value of 29.96.
Guosheng Macro Research Report believes that :
1. The non-farm employment in the United States in April was significantly lower than expected, which is likely to be a new round of unemployment benefits that lead to a sluggish job willingness, rather than a deterioration in the non-employment market: 1) The current level of unemployment relief in the United States is higher than the wages of many low-income jobs; 2) The sub-indicator of the US unemployment rate shows that it is easier to find a job; 3) The hourly wage rose sharply month-on-month and the average working hours hit a new high, indicating that the demand for employment in enterprises is strong; 4) The error in the unemployment rate caused by misclassification has been significantly reduced.
3. The slowdown in the unemployment rate may lead to a cooling of expectations of the Federal Reserve's QE reduction, which is good for . US stocks and negative for the US dollar.
4. Continue to maintain "How to predict the time when the Federal Reserve reduces QE? 》Judgement: The Federal Reserve must also make a decision to reduce QE at its meeting in November or December, and correspondingly, it may send a clear reduction signal at the end of Q2 or early Q3 as soon as possible.
text is as follows:
1, US 4html non-farm employment in February was significantly lower than expected. The four major dimensions show that it is likely that a new round of unemployment benefits will lead to a sluggish job willingness, rather than a deterioration in the employment market. The number of new non-farm employment in the United States in April was 266,000, which was significantly lower than the expected value of 978,000 and the previous value of 770,000; the unemployment rate in April was 6.1%, which was worse than the expected value of 5.8% and the previous value of 6.0%. However, according to the split data, it is inclined to believe that the non-farm data in April should not represent the deterioration of the employment market, and it is more likely to be a side effect of the new round of unemployment benefits. For details, we can refer to the following four dimensions:
Unemployment benefits level is higher than the wages of many low-income jobs: Biden signed a 1.9 trillion stimulus bill on March 11, including a new round of unemployment benefits that lasts until the end of August. It should be noted that $400 per week is an additional subsidy based on the original unemployment benefits of states. Data from the U.S. Department of Labor shows that the average unemployment benefits of states in 2019 were $378 per week, which means that the current unemployed people can receive an average of $778 per week of unemployment benefits of current unemployment benefits. Among all industries in the United States, the average weekly salary of leisure hotels and retail industries is significantly lower than this level, and the average weekly salary of other services is only slightly higher than this level. The employment proportion in these three industries is as high as 24%, which means that a considerable number of people have unemployment benefits higher than their wage income.
The U.S. unemployment rate breakdown indicator shows that finding a job is easier: the United States has 6 unemployment rates, see Figure 2 for details, where U3 is what is commonly known as the unemployment rate. U4-U3 represents people who give up because they can't find a job, U5-U4 represents people who can find a job but no longer find it, and U6-U5 represents people who want to find a full-time job but can only find a part-time job. April data showed that only U5-U4 rose 0.1 percentage point, while the other two items fell. In addition, the long-term unemployment rate U1 fell by 0.2 percentage points to 3.3%, the lowest level since the outbreak. These signs indicate that finding a job is becoming easier now, but some people who could have found a job gave up looking for a job.
hourly wage and working hours data show that corporate employment demand is strong: the average hourly wage in the US non-agricultural sector in April was $30.17, higher than $29.96 in March, and a month-on-month increase of 0.7% was the fourth highest since 2006, only slightly lower than March, April and December 2020. Meanwhile, the average weekly working hours in April were 35 hours, up from 34.9 hours in March, the highest level since 2006. The sharp increase in hourly wages and the average working hours hit a new high, both reflecting the strong demand for employment in US companies, rather than lack of recruitment demand.
The unemployment rate error caused by misclassification has been significantly reduced: in the non-agricultural review report in May last year, we pointed out that due to classification errors, many temporary unemployed people were classified as "employed, but temporarily suspended work due to other reasons", which led to the underestimation of the unemployment rate. When the error was the largest, the US unemployment rate was underestimated by 5 percentage points. Subsequently, the U.S. Department of Labor continued to improve its survey and statistical methods, and the error in April this year has dropped to 0.4 percentage points.
2. The US unemployment rate will continue to decline, but the decline rate will slow down.
in the previous report "How do you view the outlook for the US economy? ——In the 2021Q1 US GDP, we pointed out that the permanent unemployment rate and the number of bankrupt enterprises are the core indicators that reflect the prosperity of the US employment market. The permanent unemployment rate in the United States has been declining continuously since December 2020, and the number of bankruptcies of large-scale enterprises in the United States has continued to decline since August 2020, reflecting that the US labor market has improved endogenously. By industry, the current unemployment rate in the United States, such as leisure hotels, mining, other services, transportation and public utilities, is still significantly higher than before the epidemic. With the continued advancement of vaccination in the United States and the service industry continues to restart, the overall unemployment rate will continue to decline. However, according to the previous analysis, the current high unemployment benefits are likely to cause some low-income people to be unwilling to work. Judging from the data, since the end of March, the number of initial unemployment benefits in the United States has only dropped slightly, and the number of renewed unemployment benefits has basically flat, which is pointing to the subsequent decline in the U.S. unemployment rate will slow down significantly.
3. The slowdown in the unemployment rate will drive the Federal Reserve to reduce the expected cooling of QE, which is good for US stocks and negative for the US dollar.
In the previous report, we have pointed out many times that the main support of US stocks is huge monetary easing, which is reflected in the " S&P 500 Index /US M2" indicator, which is still lower than before the epidemic, which also means that once the Federal Reserve's monetary policy begins to tighten marginally, US stocks will face the risk of a sharp pullback. Therefore, if employment is still improving but the speed is slightly weaker than market expectations, the market will judge that the Federal Reserve will not rush to withdraw from QE, which is a good thing for US stocks. This can also explain why the S&P 500 index continued to rise and hit a record high after the release of non-farm data in April. In addition, the market generally expects that the time when the Federal Reserve reduces QE will be earlier than the ECB, which is also one of the important support for the current index . Once the market's expectations for the Federal Reserve to reduce QE cool down, the US dollar is likely to weaken again.
Risk warning: The US epidemic evolved beyond expectations; the Federal Reserve's policy stance adjusted beyond expectations.
