The NFP print today was undoubtedly strong. Employment gain surprised to the upside for the second straight month, this time by 1.8m (4.8 vs 3 million) and the unemployment rate declined from 13.3 to 11.1%. What does it mean? That the US economy opened faster than expected. Those jobs are mostly in services that were allowed to return to operations and needed some of those workers back. This also results in the COVID spike in the US so jury is still out if that was good strategy. What is key here is not when workers that were supposed to return are back but how many jobs are lost for good. Here the trend is not so rosy as more companies herald job cuts. So while the markets enjoy the data for now, it looks like controlling the pandemic is the precondition of return to organic employment growth.
As total unemployment declines, permanent unemployment is on the rise. Source: Bloomberg
