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Saturday, 6 June 2020

US to recover faster than expected

Jobs recovery begins

The US economy added 2.5 million jobs in May 2020 as the recovery gradually begins.

There were, however, large downward revisions for April (to -20.7 million) and March (to -1.4 million).

Tragic numbers, when seen in context. 

Market consensus had been for unemployment to spike to 19 per cent, with some economists warning of a possible spike above 20 per cent, but in the event the unemployment rate fell from 14.7 per cent to 13.3 per cent in May.

US Treasuries plunged as markets interpreted this as potentially meaning a faster recovery for the US economy than previously expected.

Let's hope so! 

Average hourly earnings were far higher than a year earlier at $29.75, but the data series has been rendered somewhat meaningless, distorted by so many lower paid earners having lost their jobs.

The wrap

The US unemployment rate of 14.7 per cent in April was the worst since records began in 1948, but it seems that things are now set to improve from here on out. 

Employment in the US began to rebound in May, largely thanks to healthcare and construction. 

The Canadian economy also added 290,000 jobs, which was far more than expected. 

Trump believes otherwise, at least publicly, but realistically it's going to be a long time before we see a low unemployment rate again in the US.