{"id":1544,"date":"2019-06-07T09:44:16","date_gmt":"2019-06-07T13:44:16","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1544"},"modified":"2019-06-07T09:44:16","modified_gmt":"2019-06-07T13:44:16","slug":"may-employment-report-3","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1544","title":{"rendered":"May Employment Report"},"content":{"rendered":"\n

KEY DATA:<\/strong> Payrolls: +75,000; Private:\n90,000; Revisions: -75,000; Unemployment Rate: 3.6% (Unchanged); Wages: +0.2%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe lean, mean job machine has sand in its\ngears.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong> Welcome\nto the real world.  All those firms saying they\ncouldn\u2019t find qualified workers may have been true statements not fake news as\njob gains faltered in May.  And, the huge\nincrease we thought we had in April now looks less robust while the solid March\nhiring turns out to have been only mediocre. <\/em><\/strong> The three-month average job increase now sits\nat 151,000, which is reasonable given the labor market conditions.  In May, the data were remarkable in that\nthere were no major outliers.  <\/em><\/strong>Retailers\ncut workers, but not at any huge pace. \nManufacturers and construction added workers at the expected modest rate.\n Health care and professional service\ncompanies hired moderately and restaurants continued to add workers at a\ntypical pace.  Government employment did\ndrop, but that came after an even larger rise in April, so nothing surprising\nthere either.  In other words, there were\nno usual unusual numbers that I love to pick on.  <\/p>\n\n\n\n

As for the unemployment rate, it was unchanged as\nboth the labor force and the number of employed rose at a moderate pace.  All good there.<\/em><\/strong>  The labor force participation rate was stable\nand the so-called \u201creal\u201d unemployment rate declined.  <\/p>\n\n\n\n

If there was one weakness in the report, it was the\nwage data.  Hourly wages were up\nmoderately but the growth rate over the year year continues to decelerate.  After peaking in February, it has been a\nsteady downward path and that is not good for workers or the economy.<\/em><\/strong>MARKETS AND FED POLICY IMPLICATIONS:<\/strong> Over time, the economic data wind up matching\nwhat is reasonable given the economic conditions, and that is finally happening\nwith the employment numbers.  Going\ninto the year, most economists expected job gains to be in the 150,000 to\n175,000 range, given the low unemployment rate and demographics.  Guess what: That is where we are.  The idea that we could add over 200,000\nemployees a month was unrealistic and reality is hitting home.<\/em><\/strong>  With the labor market so tight, the pace of\nincrease is still quite decent.  It\u2019s\njust that it isn\u2019t anywhere near where the politicians hoped it would be.  There are some signs that the market may be\nfaltering more than perceived.  This was\nthe second month out of the past four that job gains were below 100,000.  In addition, the data are being revised\ndownward<\/em><\/strong>, which means that the models are expecting job gains from the\nsmaller to mid-sized businesses to be stronger than what we are seeing.  That matches the ADP results, which showed\nthat small business hiring ground to a halt and mid-sized firm added workers\nmodestly.  They just cannot compete with\nthe larger companies who can pay up for workers and either they do without or\nthey face rapidly rising wage costs.  For\nsmall firms, that is usually a disaster. And maybe the most disconcerting numbers of\nall came from the wage data.  Despite\ntight labor markets, wage gains continue to decelerate.  The combination of more modest payroll and\ncompensation increases does not bode well for income growth or consumption.<\/em><\/strong>Investors cannot be happy with this report.<\/em><\/strong>  It warns of moderating growth ahead as more\nmodest job gains are starting to become a trend.  As for the Fed, this is actually a good\nreport.<\/em><\/strong>The economy is not falling off a\ncliff: It is just easing back.<\/em><\/strong> \nThus, there is no reason to cut rates. Wage inflation remains muted and\nthat means that price inflation is not likely to surge unless the tariffs are\nput on all Chinese and Mexican products. \nThere is no reason to raise rates. \nPatience can and is likely to rule!<\/em><\/strong>  The next meeting is June 18-19 and that is\nwhat is likely to be the stance, though the Fed will likely reiterate that it\nstands ready to support growth if conditions tank.  Right now, that is not happening, despite this\none weak employment report.\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Payrolls: +75,000; Private: 90,000; Revisions: -75,000; Unemployment Rate: 3.6% (Unchanged); Wages: +0.2% IN A NUTSHELL:  \u201cThe lean, mean job machine has sand in its gears.\u201d WHAT IT MEANS: Welcome to the real world.  All those firms saying they couldn\u2019t find qualified workers may have been true statements not fake news as job gains … Continue reading May Employment Report<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1544","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1544"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1544\/revisions"}],"predecessor-version":[{"id":1545,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1544\/revisions\/1545"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}