Firstly, it is important to provide some context around the 266,000 number. Under different circumstances, 266,000 could be considered a good, even great reading, but unfortunately this is not the case for April 2021. Wall Street’s consensus for the data point was just under a million, at ~970,000 jobs, which is obviously much higher than 266,000.

Furthermore, the 970,000 estimate was based on March’s blowout 916,000 headline number, which gave market participants hope, and some kind of belief, that the US labor market was roaring back to life. While 916,000 has since been revised lower to 770,000, all these very large numbers are the expectations around which the 266,000 print was judged. Needless to say, it was judged to be very lacking.

But, how much weight can be placed on the 266,000 number? It is after all an initial reading, and as we know, NFP numbers can, and have been, significantly revised in following months. If the number is revised much higher in next month’s NFP release, then everyone currently reacting in a big way would have overreacted. Conversely, if the number is revised much lower, then everyone would have under reacted, and asset prices will make even stronger moves. At this point, we simply do not know.

However, we need to consider a third scenario, which is if the 266,000 number isn’t revised in a significant way, and a blowout number does not materialize in May. If this happens, that would mean the blowout March number (770,000) probably marked the peak in job gains for this second economic reopening in the US. 

If so, then the BLS’s April 2021 Employment Situation report will provide us with other important bits of information to help us ascertain the health of the US labor market at this juncture. The labor force participation rate has improved slightly over the course of the last 12 months. It was 60.2% in April 2020, and sits at 61.7% in April 2021, which points towards people re-entering the labor force over the past year.

While this is a positive development, the size of the labor force, as well as the labor force participation rate, has not changed much during 2021. Over the four months of Jan – April ’21, the civilian labor force has increased by only 0.5%. From April ‘20 – April ‘21, the increase is a larger 2.9%.

From this perspective, nothing has really changed in the labor market during 2021, which is corroborated by the labor force participation rate. The rate stood at 61.4% in Jan of this year versus the latest reading of 61.7%. While the rate is inching higher, at this point at least, it really isn’t changing in a way that is indicative of a broad recovery in the labor market. This is made worse when considered in the context of March’s 770,000 number and the high expectations people had for April’s reading. 

As such, the lack of meaningful progress in 2021 is the second, and real disappointment for the US employment situation. Which begs the question, is this all that trillions in fiscal stimulus and trillions in QE, can buy?