the Employment Situation

Last Friday morning the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report for May.

The numbers were weak.

–According to the ES, the economy gained a net +38,000 new jobs last month.  This compares with economists’ estimates of over 100,000.

–Revisions to the prior two months’ data were both negative, together totaling -59,000 positions.  So government estimates of the number of people at work in the country actually fell for the first time in a long while.

mitigating factors

specific

About 35,000 Verizon workers were on strike during the month, a walkout that has since been settled.  That number was a subtraction from the May total.

The winter was unusually mild in populated areas of the country.  This suggests that some seasonal workers normally hired in the spring went to work earlier in the year.  One economist I saw estimates that factor might have shifted +60,000 job gains away from May. This isn’t a huge comfort, however, since, if we believe this, it implies that the favorable employment figures from earlier in the year are a little suspect as well.

general

Each month well over 3 million Americans get new jobs and an almost equal number leave their employment. The monthly job gains/losses are the difference between these two large figures.  Because of this, Labor Department statisticians say the figures are only accurate +/- 100,000 jobs.  Of course, no one brings this up when the figures are unusually good.

implications

The S&P 500 fell about three-quarters of a percent on the news, before rallying to close down by 0.29%–meaning Wall Street (correctly, in my view) isn’t concerned.

The Fed?  I don’t think the ES will make any difference, although the coming rise in the Fed Funds interest rate may be postponed until next month.