Via the excellent George Tharenou at UBS:
Payrolls -227k in 2 weeks to April 18; totalling -975k (or -7.5%) since March 14
For the two weeks to April 18, payrolls declined a further 1.7%, albeit slowing after a 5.8% slump in the prior three weeks to April 4. The total decline over five weeks since March 14 (when COVID-19 really ‘hit’) is now 7.5%. While the change in payrolls may modestly overstate the decline in the number of employed persons – because ~1mn people (~7% share) work in multiple jobs – it implies job losses of 227k in the two weeks to April 18, and a total fall since COVID of 975k. This is ~consistent with PM Morrison saying last week there are now 1.5mn people on JobSeeker, with 900,000 new claims in the last six weeks.Implied unemployment rate now ~12%+; upside risk to our 10½% forecast
If we assume no offsetting decline in participation, the ~1mn job losses would see unemployment hit ~12%+, the highest since the Great Depression. That said, even assuming 1/3 of these job losses result in lower participation (and hence not count as ‘unemployed’), then the unemployment rate would still spike to ~10%. While some mobility restrictions are starting to ease, this so far is focused on ‘social distancing’, rather than the regulated shutdown of many businesses. While the Government indicated they will move towards opening the economy in coming weeks, we expect it will take time before a return to ‘normal’, given the risk of another wave of cases if restrictions are lifted too much and/or too soon (as occurred in some other countries). Looking ahead, it still seems very likely that payrolls will continue to decline in coming weeks. However, we reiterate the labour force survey (LFS) – which samples only 50k people – is likely to be nowhere near as bad as the payrolls ‘reality’ because 1) those that lose their jobs but are not looking for or available to work will not be counted as unemployed, & 2) those on JobKeeper deemed to have a ‘job to return to’ will count as employed (even if working zero hours). Government comments indicate there are so far around ~3mn people on JobKeeper (which is additional to JobSeeker); albeit far less than the ~6.6mn people initially projected. Overall, we continue to expect that LFS employment will decline by ~7% in coming months, with the unemployment rate lifting to 10½% by June. The risk to our forecast is still clearly an even worse outcome.
