Friday was a good day for markets and a bad day for forecasters, with the unemployment rate unexpectedly falling to 13.3% (vs. 14.7% last month) and a 2.5M increase in nonfarm payrolls. Consensus expectations were for a 7.5M decrease in payrolls, which would have pushed the unemployment rate to 19.0%. The unexpected turn, especially with the background of weekly unemployment claims, prompted some to say the economy may have turned the corner earlier than anticipated as workers returned to their jobs following the start to re-opening the economy. Digging into the report, job gains were fairly widespread, though healthcare workers, specifically dentists, accounted for an abnormally large portion of the increase in payrolls (245K dentists returned to work). Labor participation ticked up slightly from last month but is still 2.6 p.p. below February (60.8% vs. 63.4%), and with 21M Americans unemployed, there is a hill to climb for the consumer to get back to where we were pre-COVID. Manufacturing data, via both the Markit and ISM Manufacturing surveys, is still solidly on contractionary territory at 43.1 (anything below 50 is considered contractionary), though was a slight improvement from April’s 41.5 reading. April’s final durable goods orders settled at -17.7% while factor orders plunged 13%. It wasn’t too long ago that the biggest news in the week was the ISM and Markit surveys disagreeing with each other on the state of the manufacturing industries. Markets largely shrugged off unrest across the nation over the last week that dominated headlines and caused several cities to institute curfews.
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