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US Payrolls Surge as Economy Reawakens

by Karl Schamotta | April 2, 2021

The United States created 916,000 jobs and the unemployment rate tumbled last month as businesses – expecting a historic economic recovery – ramped up hiring. January and February were revised up by a combined 156,000.

Gains were broad-based, with the public sector contributing 136,000 jobs while 780,000 were added in the private sector. Importantly, the strongest additions came in the leisure and hospitality industry, which took the biggest hit due to the government-imposed shutdowns. 280,000 roles were generated, leaving the sector 3.1 million below pre-pandemic levels.

The headline unemployment rate fell to 6.0% from the previous month’s 6.2% reading, and a broader measure that includes discouraged workers and those holding part-time jobs for economic reasons – the U-6 – dropped to 10.7% from 11.1% in February.

Healing in the labour market occurred as an accelerating vaccination campaign encouraged regional authorities to lift social distancing restrictions – and as President Joe Biden’s $1.9 trillion spending bill helped drive a historic improvement in business sentiment levels. A recent Institute for Supply Management survey showed US manufacturing activity leaping to the highest in level in more than 37 years last month.

Equity bourses are closed, leaving bond desks and holiday-thinned foreign exchange markets to express price action. 10-year US Treasury yields popped back to 1.69%, lifting the trade-weighted dollar slightly – but the reaction was modest, suggesting that the upward skew evident in expectations ahead of the print helped calm markets. On average, economists surveyed by Dow Jones had been expecting a 675,000-position jump, but a number of the biggest money-center banks had set estimates considerably higher – closer to the 1 million mark.

Taken in sum, today’s job data might help put the good back into Good Friday (which had become something of an obsolete misnomer in modern English). Have a great weekend!

Karl Schamotta
Chief Market Strategist

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