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May`s Employment Report to Top 300K

EconMatters's picture




 

Job Market Tightening

 

The labor market is really starting to tighten and Thursday`s initial jobless claims coming in at 297,000 for the May 10 week is the lowest reading since May 2007. In several of the economic reports this week, increased strength in the labor components also suggest increased hiring in the manufacturing sector in the Empire State Manufacturing Survey coming in at a whopping 19.01.

 

This follows the strongest employment report since the financial crisis where the economy added 288,000 jobs bringing the unemployment rate down to 6.3%, with upward revisions for the previous two months as well. So the jobs market is trending higher, and this is the best run of job creation since the financial crisis.

 

Inflation Rising

 

The PPI and CPI reports this week also showed us that inflation is really starting to stoke in the economy for the first time since the financial crisis where it is actually showing up in the data the Fed tracks. The PPI up 0.6 percent in April, following a 0.5 percent boost in March with the CPI coming in at 0.3 percent rise for April while previously rising 0.2 percent in March. Expect the PPI to start bleeding into the CPI in the coming months, and are we finally coming to that moment where inflation that everybody recognizes starts showing up in ‘undeniable bluntness’ that finally captures the attention of Wall Street and the Federal Reserve by showing itself even in the artificially watered down metrics used to track inflation by the US Government?

 

Inflation Inflection Point

 

We all experience inflation in our everyday lives, and obviously it is being downplayed by Central Banks wanting to inflate the monetary base, and thus monetize the debt by making its significance less in relative terms. But are we finally coming to that point in Great Britain and the United States where inflation really starts to take off and get out of hand? I think once these minimum wage initiatives get implemented this is where wage inflation and price increases really start taking off, and we are in store for some shocking PPI and CPI reports over the next year. 

 

I think this is the one area where markets and the Federal Reserve are really asleep at the wheel, under the radar we are starting to see some forces come together to finally make a reality - the inflation problem of being behind the curve in tightening mode that we all feared would show up one day. By the time the Fed realizes inflation is a problem it is too late, and because it has failed to rear its ugly head for five years on loose monetary policy, the complacency factor is huge right now in the financial community.

 

Wage Pressures

 

I have seen wages rise significantly in my high skilled colleagues who move from better paying opportunities to the next with fortune 500 corporations fighting over scarce talent, the only thing holding wages down have been the entry level and middle class job categories. Once the minimum wage is increased this puts upward pressure on wages in the next tier of salaries, as increased responsibilities necessitate higher wages than entry level, and so on up the wage scale. The analogy is the housing market where an increase in first time buyers into the market puts upward pressure on the housing market raising prices on the next tier as more home owners are able to move up to the next tier, thus reinforcing prices in an upward slope.

 

I think raising the minimum wage is good for the economy in the long run in this instance, but there is definitely going to be some growing pains in terms of higher inflation, and a tighter monetary policy going forward. I think the Fed can talk down the market all they want, but they are going to be raising rates a whole lot sooner than their current rhetoric would have Wall Street believe. Moreover, if they make the mistake of stalling rate increases to appease Wall Street they will fall significantly behind the inflation curve, and the pain in playing catchup in terms of monetary policy pain will be far worse for the street.

 

May Employment Report in 2 Weeks

 

Thus watch the May employment report which comes out in two weeks, I predict another very strong employment report that shows the trend in job creation is much stronger than most on the street realize. I am looking for a breakout number above 300k based upon how the initial jobless claims data is trending of late, and some of the employment components in the economic reports. There is little doubt that the job market is tightening, and wage pressures are sure to follow, real in your face inflation is just around the corner, and the Federal Reserve will be tightening monetary policy much sooner than most people realize in the financial community.

 

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Fri, 05/16/2014 - 13:40 | 4767026 AdvancingTime
AdvancingTime's picture

How do we reconcile the April jobs report that showed 288,000 jobs being created and 806,000 people dropping from the work force with economic reality? 

My take on the recent jobs report is that as spring comes upon us ever optimistic and more desperate Americans are being pushed into making a decision as to whether to leave the work force or take a lower paying job that is often part time. Yes, people are busy scurrying around, but it should be clarified not at a fast pace. The question then arises as to how this will spill over to economic policy. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/05/reconciling-april-jobs-report-wit...

Fri, 05/16/2014 - 13:02 | 4766946 litemine
litemine's picture

This was much easier for the Fed before the Internet. Now it's obvious they manipulate numbers and feed the Population BULL SHIT.

Politicians need to be accountable. They are in positions of trust, and they lost my Trust. No wonder they have rules that they can't be charged in Court.  

Fri, 05/16/2014 - 12:59 | 4766939 adr
adr's picture

Citing government supplied employment figures as fact is like a 300lb girl putting that she is a lingerie model on her online dating profile.

Fri, 05/16/2014 - 12:16 | 4766835 kurt
kurt's picture

Had Enough

It's a Lie

Fri, 05/16/2014 - 11:44 | 4766722 Save_America1st
Save_America1st's picture

The Fed "targets" 3% inflation but then denies that they're causing inflation and then they lie about the stats used to calculate true inflation even though they "fear" deflation which is actually what we all truly want and need to have right now because inflation is fucking up our entire economy.  

Can we at least get some fucking gasoline and diesel DEFLATION, please?  You fucking assholes.

FUCK YOU, PRIVATELY OWNED BY FOREIGN BANKSTER CARTEL SCUM, NON-FEDERAL RESERVE!!!

John Williams' Shadow Stats knows what's up:  http://www.shadowstats.com/

 

Fri, 05/16/2014 - 11:20 | 4766636 elwind45
elwind45's picture

So Walmart came right out and said " our part-time associates are drag everybody down because our guest shop empty shelves"?great start new turd in charge!

Fri, 05/16/2014 - 11:13 | 4766597 JRobby
JRobby's picture

Serial flamer on the loose

-19

 

Fri, 05/16/2014 - 11:06 | 4766564 the grateful un...
the grateful unemployed's picture

what i want to ask, how many jobs are coming back to the US, and of those (manfacturing) jobs how many are not being automated due to a lack of capex for new technology? if things are really getting better the jobs returning would be replaced by automated solutions. if companies are remaining tight they are hiring because people are cheaper than robots (which doesn't say much for the economy)

Fri, 05/16/2014 - 11:10 | 4766582 JRobby
JRobby's picture

1. No demand

2. No demand

3. No demand

4. Well, you know.......

Fri, 05/16/2014 - 10:53 | 4766499 fonzannoon
fonzannoon's picture

"I have seen wages rise significantly in my high skilled colleagues who move from better paying opportunities to the next with fortune 500 corporations fighting over scarce talent"

translated

"I am a douchebag"

Fri, 05/16/2014 - 12:46 | 4766916 geoffb
geoffb's picture

Upped that one. Although I prefer the more old fashioned douche nozzle.

Fri, 05/16/2014 - 11:10 | 4766578 the grateful un...
the grateful unemployed's picture

no business talent is scarce theyre only in the sweet spot where blue collar was a few decades ago.

Fri, 05/16/2014 - 10:44 | 4766453 moneybots
moneybots's picture

+288,000 jobs.  -806,000 workers.  Not what i would call a tightening job market.

Fri, 05/16/2014 - 10:32 | 4766409 DR
DR's picture

I just got done perusing todays financials news from the web and most views seem to reflect that of EconMatters that the economy is showing signs of 'heating up' and rates will be normalized sooner than expected.

The author could very well be correct but money is made in betting against the consensus. Who would have thought that after the Fed started tapering that 10yrs would eventually go lower.

Fri, 05/16/2014 - 10:41 | 4766441 moneybots
moneybots's picture

"The author could very well be correct but money is made in betting against the consensus. Who would have thought that after the Fed started tapering that 10yrs would eventually go lower."

 

Every time the FED QE'd the 10 year went up.  Every time they ended a QE, the rate went down.  Pattern was no different this time.

Fri, 05/16/2014 - 11:37 | 4766696 Comte d'herblay
Comte d'herblay's picture

...full disclosure...I did.  Three times.  

 

Much to my loss.

Fri, 05/16/2014 - 10:24 | 4766373 pound the vix
pound the vix's picture

Inflation is not good.  Corporate profits should come from efficiency not inflation.  Wages have not and will not exceed inflation so working class just falls further behind. 

Fri, 05/16/2014 - 10:19 | 4766346 Comte d'herblay
Comte d'herblay's picture

When you place a ligature around an object, say, Joe Cassano's neck, and begin to pull the two crossed ends together, for the first 6 inches, you are 'tightening' the noose, but there is no pressure that he can feel.  The onl tightening that matters is when the choking begins.  As we all know by now, Cassano was questioned, apologized to for the inconvenience, and sent on he merry way to London with his biliions of fraudulently obtained pelf. 

'Beginning to tighten', is a phrase that belongs among the rest of the Saul Alinsky propaganda rhetoric of the left, like 'a cut in the rate of increase is a cut', when in fact the increase is an increase.

We are not fooled, you fool. 

 

Fri, 05/16/2014 - 10:11 | 4766316 ebworthen
ebworthen's picture

IT'S THE LOWEST UNEMPLOYMENT CLAIMS BECAUSE THEY DON'T COUNT PEOPLE WHO CAN'T COLLECT UNEMPLOYMENT ANYMORE BECAUSE THEY HAVE BEEN OUT OF WORK FOR MORE THAN 2 YEARS!

Fri, 05/16/2014 - 10:15 | 4766291 OC Sure
OC Sure's picture

 

 

By using the terms of tyranny, you are promoting the cause of tyranny. 

Is that what you want? Are you choosing to be the tyrants lapdog?

Terms of tyranny are lies; that is the words and concepts they use are false because they are not affirmed by reality, they are denied by reality.

The purpose of spoonfeeding us  the drivel and drool of modern economics for three generations is to confuse our minds as the means to control our bodies.

Here are the lies which your article implicitly accepts and thereby serves to promote.

1. There is very little money left in the system, instead we are dealing with counterfeit.

The paper of the central banks is not money; it is only the "ghost of money," imitation, forgery; counterfeit.

The paper does not represent a measure of exhange. Money measures the work that a person does to produce something. Counterfeit measures that a person has done no work because they have not produced a thing. The paper (or exponentially multiplied digital blips) you call money does not measure an exchange of something for something; it measures an exchange of  something for nothing.

2. Inflation is not an expanding of the monetary base; it is the expanding of the counterfeiting base. This is why inflation is theft. The thief has pointed a gun at you and demanded that you accept their nothing (counterfeit) in exchange for your something (money); an exchange of their refusal to work for the best work you can do. When do you notice you've been had but had so skillfully by such an adept thief that you still can't identify it? You notice it when your purchasing power drops. What are the things that you would have done or purchased had your power to purchase not been stolen from you?

3. Employment is only employment if you are trading your work for the work done by others. If you are exchanging your best efforts with someone who makes no effort at all then you are not employed but instead you are enslaved. It is not the monthly Employment report; it is the monthly Enslavement report.

Fri, 05/16/2014 - 10:01 | 4766283 ejmoosa
ejmoosa's picture

If the labor markets were really tightening, there would be no reason at all to raise minimum wages.

 

 

Fri, 05/16/2014 - 10:00 | 4766273 oklaboy
oklaboy's picture

Jessussss, what planet is this writer from? Labor market is tightening? with 92 M out of the force, they don't count? 

Fri, 05/16/2014 - 10:51 | 4766491 JRobby
JRobby's picture

Just doing a job Mam. Gotta eat ya know. Move along, no news here......

Fri, 05/16/2014 - 09:49 | 4766222 vmromk
vmromk's picture

What an imbecilic analysis.

 

Fri, 05/16/2014 - 09:54 | 4766248 dontgoforit
dontgoforit's picture

Yeah - that 92,000,000 million out of the 'participation' pool never seems to get figured in somehow.  Kind of like a race horse with no legs.

Fri, 05/16/2014 - 10:33 | 4766417 JRobby
JRobby's picture

Horse's name: Drag 

running in the 5th at Belmont. Morning line 2/5 (the Fed was in the market early today)

look for this one to be bet up and down all day by those "in the know"

Fri, 05/16/2014 - 10:40 | 4766438 dontgoforit
dontgoforit's picture

It's a filly:  "Drag Queen" - too funny JRobby.

Fri, 05/16/2014 - 10:49 | 4766476 JRobby
JRobby's picture

Tranny (morning line 22/1, was to be running with blinkers for the first time) is scratched.

Fri, 05/16/2014 - 09:35 | 4766156 dontgoforit
dontgoforit's picture

We had a neignbor over last night.  She was in tears, very distraught.  Try getting a decent job when you're over 55 and newly divorced even if your resume is super.  She's not the only one we know.  And us, well we're hanging in there but I'm making 1/3 of what I used to.  We know others whose lives have been irrevocably smashed since 2007. 

Fri, 05/16/2014 - 10:12 | 4766320 DeadFred
DeadFred's picture

The jobs situation is all relative, where are you and what do you do. The kid of family friends just graduated with a mediocre degree in the computer field from and quickly got a job starting at 96K. He has such bad work skills I wouldn't hire him to weed my garden (I know, I did once). If you are in the Bay Area and are functional with a computer you can have your pick of jobs. It shows in the housing market. I've been helping my daughter look for a house. We found one with potential, an old fixer-upper but in a neighborhood with no graffitti and no obvious drug dealers. On the first day the bids bounced from the 540K ask up to 660K. We'll wait for the downturn, we know it's coming and we've known for three years now. The Ponzi economics isn't helping anyone a hundred miles from here in Fresno but the SF area is hot.

Fri, 05/16/2014 - 12:28 | 4766878 Common_Cents22
Common_Cents22's picture

ummm..we are talking macro picture.

 

so can the entire american work force get trained to program mobile apps and websites? 

 

sheesh.

Fri, 05/16/2014 - 10:53 | 4766435 JRobby
JRobby's picture

Tech bubble 2.0 w Housing bubble 2.5. The Bay Area seems to go for the double whammy. The Sheeple will be slaughtered over and over again.

Fri, 05/16/2014 - 08:26 | 4765865 mayhem_korner
mayhem_korner's picture

I think once these minimum wage initiatives get implemented this is where wage inflation and price increases really start taking off, and we are in store for some shocking PPI and CPI reports over the next year.

 

The minimum wage hikes don't necessarily translate to an aggregate increase in wages, and may prove to depress aggregate incomes.  Moreover, the bigger catalyst to inflation is the re-loosening of lending standards.  Unleashing to the masses the digital credit that is in the TBTF vaults (hard drives) is what is needed to accelerte inflation, imho.

Fri, 05/16/2014 - 08:11 | 4765817 mayhem_korner
mayhem_korner's picture

The labor market is really starting to tighten

 

Sure...if you include in the "employed" group those whose job description is "welfare recipient."  Many of them aren't actively seeking (another) job.

Fri, 05/16/2014 - 10:47 | 4766468 JRobby
JRobby's picture

Not a W2 or 1099 one anyway...........

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