Despite skepticism on the headline....>

US DATA REACT: Despite skepticism on the headline nonfarms numbers, this is

undoubtedly a better employment report than expected even when accounting for

the caveats (such as potential response issues). The key being workers returning

from temporary layoff bringing the number of unemployed down by 2.7mln to

15.3mln. Though this was offset by increases on non-temporary layoffs (incl

permanent job losses), which rose 295k to 2.3mln, this helped drive the beat.

- If it turns out that the vast majority of job losses were indeed temporary

(~78% at the April peak as suggested by BLS surveys), the labor market has the

potential to snap back more quickly than seems to have been expected IF

employers follow through and keep employees on board following the PPP program.

That is a big IF though.

- Will also raise questions about the link between weekly jobless claims data

and the monthly payrolls numbers, which appears to have disconnected.

- On the other hand, the U-6 underemployment gauge fell to just 21.2% vs 22.8%

last month - the headline U-3 gauge ignores those who weren't looking for work,

so perhaps not as true a gauge of the actual employment situation.