First take on US Job Report – June 3rd

Last Fri, the markets welcomed the long-awaited US job report with some real action… Now let’s take a look at what it told us…

The overall unemployment figure seemed to be better than that of May’10, showing that the economy is in better shape than a year ago. But really? Over the past 3 mths the unemployment rate has been on a steady rise across almost all demographic groups. Hardly convincing data for an economic recovery.

Duration of unemployment. It’s an interesting one. There’s no trend. And  while all the other duration groups showed slight drops, the >27 wks group figure rose by 361K in May (April: dropped by 283K). What does that mean?

Rough calculation: if it’s explained by 130K people who lost their jobs or  completed temp jobs, the 22K who ‘migrated’ from duration of 15-26 wks, the reentrants of 58K…what explains the remaining 151K increase in those unemployed for 27 wks and above?

Is it just sample quality of the survey? Even if we consider increased  labor force of 272K,  using March as a base, it is in line with the 150K/mth average.

Or should we just interpret that those unemployed for more than 6 mths are simply harder to get back into the workforce? While their unemployment insurance benefits are expected to have run out, what does it mean to the economy and society?

Nonfarm payroll is ugly. Over-the-mth change in May dropped to 54K (April: 232K; March: 194K). Again, is the so-called recovery losing steam?

So who are the culprits? Manufacturing, retail, leisure & hospitality,  along with government, were all cutting jobs. Interesting to note that the government’s 410K job creation in May’10 propped up the mth’s figure, but in Mar-May’11 it has been slashing jobs by 20+K/mth.

Seems like consumers aren’t spending (in fact the households sitll have  much de-leveraging to do), the government has its share of deficit problem to deal with…and the US is not able to export its way out of the troubles…

Avg weekly hours stable at 34.4, with avg hourly & weekly earnings on uptrend. Rising unemployment coupled with rising wages…hmm, what does this imply?

Part-time employment on an overall uptrend. Same old story, the recovery isn’t creating enough full-time jobs…

So what do we see in this latest job report? Nothing new, the same old  story we’ve already been hearing again and again: the US recovery simply isn’t creating (enough) jobs. Only that we now see some real ugly data that caught many off guard last week.

We’ve seen enough dramas since the crisis. While the ‘extend-and-pretend’ approach is widely known and fiercely criticized, it seems to symbolize how the real world politics work. Would these surprising figures be a prelude to the edge where the superpower finally has to face the truth and take the pain? Is it going to be the beginning of some ugly new episodes? So soon? Let’s hope not.

This entry was posted in the Money Game + AltMacro. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *