June 15, 2016: how bad was the jobs number? It was bad. For quite some time now, it was a foregone conclusion that the Fed would raise rates at the June meeting, and would continue to increase them (albeit, slowly) over the rest of the year. But today, the Fed "punted" (their word, not mine) and did not raise rates, and suggested they are now re-evaluating whole plan to raise rates this year because of the tenuous job situation. Yahoo!News reports:
The Federal Reserve pushed back its plans to raise its benchmark short-term interest rate, a widely expected move following a series of mixed US economic reports.
After a two-day policy meeting, the Federal Open Market Committee unanimously voted to hold the federal funds rate between 0.25% and 0.50%, citing weakness in recent employment data.
“[T]he pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished,” the central bank wrote in its statement.
For the second time, the Fed withheld mention of global economic risks and provided no assessment of the balance of risks, implying that officials are still keeping their options open for a rate hike this summer, but uncertainty and headwinds abroad could arise.
The cautious stance comes after an unexpectedly weak payrolls report in which the US economy added only 38,000 jobs in May, the lowest level in six years. Other employment data has been varied.
The hiring rate slowed in April, but jobless claims are near record lows. Fed officials have said that they are waiting for more data before placing weight on the May employment numbers.
Original Post
Remember: these were the "magic numbers" before the Obama administration:
Since then, Reuters, Bloomberg, others have revised them "down" to fit the Obama economy.First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation)New jobs: 200,000 (< 200,000 new jobs: economic stagnation)
So, today's number: 38,000.
From Business Insider:
The US economy added 38,000 jobs in May, a lot fewer than expected, while the unemployment rate fell to 4.7%.
Economists had forecast that nonfarm payrolls grew by 160,000 in May — the same pace as April — while the unemployment rate slipped to 4.9% from 5% according to Bloomberg.And it gets worse. The March number was revised significantly downward:
The pace of month-on-month job gains has slowed since October. The nonfarm payroll print for March (sic) was revised to 123,000 from 160,000.But then the spin:
While this suggests employers are scaling back hiring, it's worth considering that the low unemployment rate means there are fewer workers willing and able to hire."Willing" workers -- workers dropping out of the workforce.
And, then, as predicted, the Verizon excuse:
Additionally, the nearly 40,000 Verizon workers who were on strike during the reference week of the jobs report were expected to drag the headline, although there was no consensus on the extent of the dent.
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Jobs and Tea Leaves
I see "hiring now" signs all over the DFW area.
Starting hourly wages for entry-level fast food type jobs at $13 - $18 in the local area.
Tech companies screaming to allow more immigration.
Regardless of the reason, regardless of the accuracy, the fact is that employers are facing a 4.7% unemployment number -- the lowest since 2007.
Verizon strike didn't last long.
The news articles are focused on the 4.7% unemployment rate -- in the headlines -- including the WSJ and yet hiring slowed "drastically" -- their words, not mine -- in May -- to 38,000.
Again, how did analysts missit by so much? Forecast: 160,000. Actual: 38,0000.
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The Graph
The three "up" arrows: the month of May for the past three years.
Look how incredibly low the bar is for the latest reporting period. One would almost have to say there was a huge "fat finger" error. There is simply no way the country only added 38,000 jobs in May.
Look at the trend since November, 2015. The trend line has the same slope as the glide path of the F-16 that crashed in Colorado yesterday.
And then look at the magic number: 200,000 jobs -- less than 200,000 jobs correlates with economic stagnation.
With energy so incredibly cheap, employers should be expanding, hiring.
In no article is the 800-pound gorilla mentioned: ObamaCare.
I didn't even see much written about the oil / gas sector depression.
The big "disconnect": no hiring and an unemployment rate of 4.7% -- the lowest since 2007. One starts to think that the unemployment number is entirely irrelevant.
It will be interesting to see some real good soul-searching reporting / analysis -- we won't see it in mainstream media. I'm hoping Mark Perry or ZeroHedge will pick up on it.
If anyone was "worried" about the Verizon strike taking away 35,000 jobs from the pro forma whisper number of 200,000 with consensus expecting 160,000 jobs, or worried about a rate hike by the Fed any time soon, you can sweep all worries away: moments ago the BLS reported that in May a paltry 38,000 jobs were added, a plunge from last month's downward revised 123K (was 160K). The number was the lowest since September 2010!
The household survey was just as bad, with only 26,000 jobs added in May, bringing the total to 151,030K. This happened as the number of unemployed tumbled from 7,920K to 7,436K driven by a massive surge in people not in the labor force which soared to a record 94,7 million, a monthly increase of over 600,000 workers.
As expected Verizon subtracted 35,000 workers however this was more than offset by a 36,000 drop in goods producing workers. Worse, there was no offsetting increase in temp workers (something we caution recently), and no growth in trade and transportation services.
What is striking is that while the deteriorationg in mining employment continued (-10,000), and since reaching a peak in September 2014, mining has lost 207,000 jobs, for the first time the BLS acknowledged that the tech bubble has also burst, reporting that employment in information declined by 34,000 in May.
The change in total nonfarm payroll employment for March was revised from +208,000 to +186,000, and the change for April was revised from +160,000 to +123,000. With these revisions, employment gains in March and April combined were 59,000 less than previously reported. Over the past 3 months, job gains have averaged 116,000 per month.
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