April Unemployment Could Beat Expectations

There has been a steady trend in economic data, and that trend is a steady wave of “less-bad” data.  We are even starting to see hints of that in the the employment numbers.  It may be a bit soon for this assumption, but there is an outside chance that Friday’s unemployment data may come in at a level that is not quite as bad as economists expect.

Today’s Labor Department data on jobless claims came in at 601,000 for the week, down from a revised 635,000.  Economists were looking for 635,000.  The four-week average fell to 623,500.  The real number to factor in this last week’s rise of another 56,000 jobless to the continuing jobless claims of 6,351,000.  So just over 6.35 million have been in the government’s check lines at least twice in a row.

A true wild card for tomorrow is this crazy ADP report from Wednesday.  That report showed that private sector jobs fell by “only” 491,000 last month rather than by some 600,000 or more that was expected.

Bloomberg has consensus estimates for tomorrow’s unemployment pegged at 8.9% for April, a gain of another 0.4% from March’s 8.5% reading.  And the change in non-farm payrolls is expected to be -630,000, down from the -663,000 reported in March.  There are some economists with an expectation for a 9.0% reading tomorrow.

We have been crunching everything we can to come up with a number.  With all of the jobs that have been lost and the continuing claims data still rising, we just can’t get too optimistic of the picture ahead of time for tomorrow’s data.  But we could see that maybe those non-farm payrolls contracted closer to a reading of -600,000 or even a tad better, and we see an outside chance that the unemployment rate comes in ‘only’ at 8.8%.

There is still the wild card of the unofficial unemployment figures that are already well into double-digits.  It is nearly impossible to calculate an exact number, but for every unemployed person officially on the government rolls, there is another person which has either not gone to collect unemployment, or is under-employed, or working part-time or on a contract.

We still feel that unemployment will ultimately either hit 10% or get close enough to 10% that the number is a formality before the recovery gets formally underway.  But right now the market is still looking for any good news it can find on the labor front.  There is a chance that tomorrow’s “less-bad” gets a solid cheer. Unemployment of 8.8% and anything under -600,000 in non-farm payrolls would probably be enough for quite a cheer.

JON C. OGG