The labor department report on employment figures may show some encouraging signs of recovery.

However, this good news comes tempered with other not-so-optomistic reports that can put a strain on consumer behavior.

According to market reports, for the third straight month the April 2011 employment figures showed that in the non-farm and the private sectors, the number of  jobs added exceeded expectations.

While encouraging another barometer of consumer behavior, jobless claims, showed a trend that the truth is exactly the opposite of the positive growth in payroll data.

Applications for jobless benefits jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed this week.

Implications for ABS

For the U.S. securitization market, the rise in unemployments should not have an impact on ABS transactions that are tied to consumer related assets.

"Auto loan and credit card performance will continue to show a healthy resistance to ongoing elevated jobless claims and unemployment levels," said Kevin Duignan, head of U.S. structured finance at Fitch Ratings.

Barclays Capital economists expect the unemployment rated to start to drop to 8.3% in 4Q11, with further declines to 7.8% in 2Q12.

This, ABS analysts at the bank said, means credit card ABS performance should remain positive over the longer term.  

"Given our economists’ forecast for the unemployment rate to decline , we expect aggregate bank card charge-offs to reach 6.50% to 6.75% at end-2011 and 6.00% to 6.25% in 2Q12," said  Barclays analysts.

 

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