• Market Crumbs

ADP Reports 20 Million April Job Losses

Image via Tim Gouw on Unsplash

Job losses continue to be a hot topic as the coronavirus continues to wreak havoc on the U.S. economy. Last week's initial jobless claims brought the trailing six-week total to more than 30 million Americans who have lost their jobs.

With a new month brings new monthly data as ADP released its April report yesterday, which showed private payrolls eliminated 20,236,000 jobs during the month. The total from last month is the highest since the monthly report began in 2002 and blows away the prior record of 834,665 in February 2009.

As bad as April's ADP report was, it's likely understated as ADP used the week of April 12 for its sample period. The remaining weeks in April saw more than 8 million initial jobless claims filed.

"Job losses of this scale are unprecedented," co-head of the ADP Research Institute Ahu Yildirmaz said. "The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession."

The services and hospitality sector was the hardest hit in terms of job losses as the sector accounted for 8.6 million of the month's job losses. Trade, transportation and utilities was the second-hardest hit sector, accounting for 3.44 million of the month's job losses. Education and management of companies or enterprises were the only sectors to see job gains, adding 28,000 and 6,000 jobs, respectively.

Companies with more than 500 employees shed the most jobs last month as just under 9 million employees lost their jobs. Companies with less than 50 employees accounted for 6 million of the job losses, while mid-size companies accounted for the remaining 5 million job losses.

All eyes will now be on Friday's April nonfarm payrolls report which is expected to show payrolls fell by 21.5 million in April with the unemployment rate expected to jump to 16% from 4.4%.

St. Louis Federal Reserve President James Bullard is prepared for Friday to show an ugly number. "The unemployment rate is going to be extremely high," Bullard said. "We think 20% isn’t unlikely, could even be higher than that."

Leftover Crumbs

  • Gotta pay for it somehow. The U.S. Treasury will issue a new 20-year bond later this month to fund the increase in borrowing as a result of the coronavirus. "Treasury’s borrowing needs have increased substantially as a result of the federal government’s response to the COVID-19 outbreak," assistant secretary for federal finance Brian Smith said. "Over the next quarter, Treasury’s cash balance will likely remain elevated as Treasury seeks to maintain prudent liquidity in light of the size and relative uncertainty of COVID-19-related outflows."

  • Spring home buying. Mortgage applications to purchase a home increased 7% last week, the third straight weekly increase, according to the Mortgage Bankers Association’s seasonally adjusted index. Despite the average 30-year fixed-rate mortgage falling to a record 3.40%, refinance applications fell 2% for the week but remain more than 200% higher than the same period last year. Total mortgage application volume increased by 0.1% for the week.

  • European Union contracting. The European Commission predicts the European Union will contract 7.4% in 2020, marking the worst period for the region since the Great Depression. In February, the European Commission predicted GDP to increase 1.4% in the European Union in 2020. "Europe is experiencing an economic shock without precedent since the Great Depression," European Commissioner Paolo Gentiloni said. "Both the depth of the recession and the strength of recovery will be uneven … Such divergence poses a threat to the single market and the euro area."

  • No foul language. Twitter is testing a feature that will notify users that their reply to a tweet may include "offensive or hurtful language." Twitter said the global test of the feature will last a few weeks. "We’re trying to encourage people to rethink their behavior and rethink their language before posting because they often are in the heat of the moment and they might say something they regret," Twitter's global head of site policy for trust and safety Sunita Saligram said.

  • Virgin Galactic, NASA team up. NASA has signed a Space Act Agreement with Virgin Galactic and its manufacturing subsidiary The Spaceship Company to facilitate the development of high Mach vehicles for potential civil applications. "This Space Act Agreement will enable NASA to collaborate with Virgin Galactic and The Spaceship Company to allow our organizations to take advantage of new tools, techniques, and technologies developed over the last 50 years and to explore potential new solutions for the commercial aviation industry," Director of the NASA Aeronautics Advanced Air Vehicles Program Dr. James Kenyon said.