When 8.9% Unemployment Starts Sounding Good

The Labor Department has posted the unemployment rate and nonfarm payrolls data from April.  The official government unemployment rate was 8.9%, up from 8.5% in March.  The change in nonfarm payrolls came in at -539,000 , down from -663,000 in March.

We had  estimates from Bloomberg yesterday at -630,000 for this month, but there was starting to be a whisper number going around that traders are now looking for something well under -600,000.  CNBC was talking about the new consensus being -610,000, but we had the whisper numbers even lower than that.  The Bloomberg consensus for unemployment was 8.9%, but there was hope of 8.8% from many traders.

The ADP data coming in much lower at a drop of 491,000 rather than some number above 600,000 started this change.  Be advised that ADP’s payroll data has had many problems matching the government number in the past and has been widely criticized by many.

Then yesterday’s 601,000 in weekly jobless claims rather than a 635,000 figure also helped to guide these whisper numbers down for a “less-bad” jobs data.

This data make have taken a backseat compared to the stress test data, although now this looks like it will just add to or support some of the euphoria already in place.

There is an issue here with the government’s addition here.  The cuts were across the board, except for Uncle Sam.  Even temporary jobs contracted by some 62,000.  The government added 72,000 jobs and many of those are temporary Census workers. Healthcare even added 17,000 jobs to the data.

There are still risks that the unemployment rate will hit double-digits before the bottom in employment is reached.  S&P futures were up 12.30 at 919.30 at 8:25 AM EST just ahead of the data.

Jon C. Ogg
May 8, 2009