Payroll Postmortem

Tyler Durden's picture


In perhaps the under-statement of the year, BofA's Economics group note that "May's unemployment report was a disappointment" with evidence of a weather reversal and weakness concentrated in construction, leisure, and temporary help. Pointing out that "This is the recovery of fits and starts", BofA believes we are entering a slow patch in the second half of the year. They do not see this report as sufficient to prompt Fed action in June, but it makes August QE increasingly likely. The weakness in the US data is overlapping with an intensifying crisis in Europe, which means the risk-off trade continues.

From BAML Economics:

Payroll trend is slowing: The economy added 69,000 jobs in May, and April and March were revised down a cumulative 49,000. This provides an offset to the solid gains of 250,000 during the winter. We believe this is largely a weather payback. In our view, the underlying trend in payrolls is close to 125,000.

Weather reversal: There was clear evidence of a weather payback, with construction jobs down 28,000, leisure/hospitality jobs down 9,000 and temporary hiring only up 9,000. All three of these sectors had seen solid job growth during the winter.

Unemployment rate higher: The unemployment rate increased to 8.2% (8.206) from 8.1%, as a gain in the labor force offset an increase in household employment. The labor force jumped 642,000 after two months of sharp declines; this may be partly explained by students entering the labor force. Looking past the monthly noise, we believe the labor force participation rate will head lower as long as job growth remains sluggish.

Signs of stress: The median duration of unemployment increased to 20.1 weeks from 19.4, showing signs of distress in the labor market. Long-term unemployment leads to skill depreciation and makes it more difficult to ultimately find employment. In addition, there has been a continued rise in part-time jobs, which shows how cautious businesses have been.

What does it mean for the broader economy? Spare capacity has translated to soft wage growth. Average hourly earnings were only up 0.1% mom or 1.7% yoy, which means continued weakness in income growth. Moreover, with the three-month trend in aggregate hours worked running just 1.0%, today’s employment report suggests downside risk to Q2 GDP. This is the beginning of the slowdown, which we expect to translate to only 1.0% GDP growth by Q4.

Fed will respond, in time: While it increases the chances, we do not believe today’s report is sufficient to prompt Fed action on June 20. However, we think it is increasingly likely the Fed will announce another round of QE at the August 1 or Sept 13 meeting. The Fed will not sit idle as the economy slows.

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 06/01/2012 - 10:45 | 2484050 godgunsandgold
godgunsandgold's picture

....and this number will also be revised down....

Fri, 06/01/2012 - 10:48 | 2484063 Quintus
Quintus's picture

Hey, it's traditional.

Fri, 06/01/2012 - 10:48 | 2484064 slaughterer
slaughterer's picture

Obama impeachment 2012.

Fri, 06/01/2012 - 10:54 | 2484099 SheepDog-One
SheepDog-One's picture

I dont know, I think theyll just stage some huge event now.

Fri, 06/01/2012 - 11:08 | 2484201 Shatmadim
Shatmadim's picture

Green light Israel. Scares the sh:t out of me.

Fri, 06/01/2012 - 13:22 | 2484845 Dien Bien Poo
Dien Bien Poo's picture

ben and jerrys ice cream free for everyone event or lets take over the rest of the wrld event?

Fri, 06/01/2012 - 11:33 | 2484347 amadeusb4
amadeusb4's picture

For extrajudicial killings, yes. For failing to resuscitate the economy after the Bush / Cheney duo shot it in the head, set it on fire and kicked it off the edge of a cliff?

Thanks for the chuckle.

Fri, 06/01/2012 - 11:45 | 2484383 therearetoomany...
therearetoomanyidiots's picture


Fri, 06/01/2012 - 11:46 | 2484395 john39
john39's picture

your vote is irrelevant.  there is only THE PARTY.  and it never loses and election.

Fri, 06/01/2012 - 12:10 | 2484496 Chump
Chump's picture

All he and the Justice Department had to do was prosecute fraud and quit making bankers whole on their bad bets.  Remain passive on one hand and operate as the government was intended to operate on the other.  Not so hard.

Instead we've got *this* clusterfuck on our hands.  Stop apologizing for negligence and incompetence.

Fri, 06/01/2012 - 14:55 | 2485365 Iam_Silverman
Iam_Silverman's picture

"All he and the Justice Department had to do was prosecute fraud and quit making bankers whole on their bad bets."

I'm sure that Million Dollar Bonus or Krugman will be along shortly to refute this....

Fri, 06/01/2012 - 17:24 | 2486057 Dane17
Dane17's picture

Reminds me of a story I just read on paid Internet shills.

Fri, 06/01/2012 - 11:46 | 2484396 L_Conquistador
L_Conquistador's picture

I disagree.  Better to let Romney debate him and teach Americans about the virtues of private investment over socialism.  Then let Americans consciously show him the door in Novemer.

Fri, 06/01/2012 - 12:13 | 2484516 Chump
Chump's picture

I just can't wait until Romney discusses the virtues of gun bans and single-payer health care.  When do you think he'll mention that stuff?

Fri, 06/01/2012 - 12:22 | 2484551 LawsofPhysics
LawsofPhysics's picture

Yeah, and I am sure Romney will never sign legislation that uses taxpayer money to bailout private equity or private companies < sarc off >

Fri, 06/01/2012 - 12:33 | 2484590 Chump
Chump's picture

No, not him, never.  That would be all socialisty and he is a rock solid conservative (that signed a gun ban and instituted single-payer health care as governor of MA)

Romnebama for King 2012!

Fri, 06/01/2012 - 12:21 | 2484540 LawsofPhysics
LawsofPhysics's picture

LMFAO!!!!  Is this the same "private investment" that gets bailed out by taxpayers?  another idiot that still believes the "two-party" lie.  Wake the fuck up, Romneys supporters are the same financial houses that got Obama elected in 2008.  What a maroon.  Still can't recognize crony capitalism and fascism can we?


Fri, 06/01/2012 - 13:30 | 2484898 Dien Bien Poo
Dien Bien Poo's picture

why? just because you dont like him? impeachment should be used for crimes. lets start with starting an illegal war in Iraq and kiiling thousands of innocent people. fairs fair right? 

Fri, 06/01/2012 - 10:48 | 2484068 Dr. Richard Head
Dr. Richard Head's picture

What is it 36 times now the number revised down after print and downward revision is announced way back in the obituriaries of the paper.  Actually posting BLS numbers would make sense in the obituaries, come to think of it.

Fri, 06/01/2012 - 10:52 | 2484089 evolutionx
evolutionx's picture

five devastating storms will mark the summer of 2012 and thus accelerate the process of world geopolitical swing:

    . US relapse into recession against the background of European stagnation and BRICS slowdown
    . dead end for the central banks and interest rate increases
    . storm on the foreign exchange and Western sovereign debt markets
    . Iran, the war ´ too far ª
    new crash in the markets and financial institutions.


Full Analysis:

Fri, 06/01/2012 - 14:57 | 2485378 Iam_Silverman
Iam_Silverman's picture

Thanks for the Spam, wanker.

Couldn't you at least write something trying to pretend that this senseless plug for your blog was On Topic?

Fri, 06/01/2012 - 12:21 | 2484542 smb12321
smb12321's picture

Through it all, Liesman (CNBC) is still babbling, things aren't so bad, folks aren't reading the right reports, we're set for 2.5%% growth (contradicting everyone).  The Liesman crowd gave interest rates, massive FED intervention, absurd bond yields, continual buildup of debt - and it did no good.  (Liesman would say we are still slogging forward.)  The criticize Santelli's ideas as "unworkable in the real world" while insisting on...more of the same. 

Fri, 06/01/2012 - 13:35 | 2484936 Dien Bien Poo
Dien Bien Poo's picture

if you are listening to those monkeys on CNBC for your news you are truly misguided and possibly high. 

i am willing to send you my address to send whatever you are smoking or snorting and allow me to enjoy the world according to those fools. 


Fri, 06/01/2012 - 10:48 | 2484058 carbonmutant
carbonmutant's picture

"They do not see this report as sufficient to prompt Fed action in June..."

There will be dissent...

Fri, 06/01/2012 - 10:48 | 2484066 GMadScientist
GMadScientist's picture

You mean the warm winter was a...<gasp>...mirage?

Pulling demand forward leaves a lull elsewhere. TANSTAAFL.

Fri, 06/01/2012 - 10:49 | 2484070 Foul Harold
Foul Harold's picture

Investing in this market you've got to ask yourself one question.. "Do I feel lucky?"


Well, do ya punk?

Fri, 06/01/2012 - 11:06 | 2484168 A Lunatic
A Lunatic's picture

Well, there is one other question that one should at least passively entertain before parting with those freshly printed fiat coupons, and that is simply this. What would a magic Elf riding a rainbow colored, skittle shitting unicorn do?

Fri, 06/01/2012 - 13:37 | 2484953 Dien Bien Poo
Dien Bien Poo's picture

eat his own feces?

Fri, 06/01/2012 - 12:00 | 2484458 optionsman
optionsman's picture

+1 keep trying to look for "fair" value of anything in these "markets" and then what is cheap or rich relative to that - good luck.

Fri, 06/01/2012 - 10:48 | 2484071 SheepDog-One
SheepDog-One's picture


Fri, 06/01/2012 - 11:52 | 2484419 azzhatter
azzhatter's picture

We seem to hit a lot of slow patches

Fri, 06/01/2012 - 10:50 | 2484073 Arnold Ziffel
Arnold Ziffel's picture

My Dad's employer is trying not to lay off any more people and cut salaries by another 10% effective today, June 1st. How do these cuts show up in unemployemnt numbers?

Fri, 06/01/2012 - 10:52 | 2484091 godgunsandgold
godgunsandgold's picture

Underemployment? Deflation? Stagflation?

Fri, 06/01/2012 - 10:54 | 2484098 bdc63
bdc63's picture

I think you already know the answer but I'll humor you anyway ... they don't.

Fri, 06/01/2012 - 10:57 | 2484106 carbonmutant
carbonmutant's picture

You sound like a troublemaker...

Fri, 06/01/2012 - 11:20 | 2484268 derek_vineyard
derek_vineyard's picture

passive, aggressive often gets the point accross

Fri, 06/01/2012 - 11:52 | 2484423 azzhatter
azzhatter's picture

possible militant- better send a drone

Fri, 06/01/2012 - 15:03 | 2485411 Iam_Silverman
Iam_Silverman's picture

"cut salaries by another 10% effective today, June 1st. How do these cuts show up in unemployemnt numbers?"

They fall firmly into the "Jobs Saved" slot in the White House Spin Machine, while the person hired by the government to process their newly qualified for SNAP benefits will be fed into the "Jobs Created" slot.


See, what you tried to portray as bad news was really good news!  Rally on Dow, rally on....


On an OT note, if you enter the word "Whitehouse", and then toggle spellchecker, guess what one of the options offered got it!  Whorehouse!  Just too good NOT to put in here!

Fri, 06/01/2012 - 10:50 | 2484075 Kayman
Kayman's picture

Our myopic "leaders" still haven't figured it out.  They can pour all the gas they want down the carb but the engine is seized up.

Your cannot outsource for 30 years, then expect a gossip site on the internet, hamburger joints and Big Boxes selling Made in China shit, to sustain a nation.

Fri, 06/01/2012 - 11:12 | 2484219 PulpCutter
PulpCutter's picture

Exactly.  American stimulus has worked quite well, and produced a ton of jobs.

In China.


Fri, 06/01/2012 - 11:11 | 2484220 Al Huxley
Al Huxley's picture

Now you tell us...

Fri, 06/01/2012 - 11:15 | 2484247 kahunabear
kahunabear's picture

Excellent post, pretty much sums it all up. Well done!!!

Fri, 06/01/2012 - 11:23 | 2484294 LawsofPhysics
LawsofPhysics's picture

You are correct sir, plus one.  Until there are some real consequences for these paper-pushing, wealth-stealing motherfuckers the capital and resource  mis-allocation and mal-investment will continue.  The producers of goods and services of real value have long since gone to the sidelines and the only folks who fear eCONomic collapse are those who know that the true value of their labor ain't shit.  This is why fraud has remained unprosecuted, the status quo and "leadership" of the last 30+ years would have to prosecute themselves.

Hedge accordingly (hint: all economies are really local and becoming more local by the minute)

Fri, 06/01/2012 - 11:39 | 2484375 WallStreetClass...'s picture

amen to that

Fri, 06/01/2012 - 12:11 | 2484500 uhb
uhb's picture

AMEN Brother!

Fri, 06/01/2012 - 12:10 | 2484501 Ricky Bobby
Ricky Bobby's picture

But but but ... Gov payrolls have been growing, with pay increases and fantastic benefits too.

Fri, 06/01/2012 - 15:07 | 2485430 Iam_Silverman
Iam_Silverman's picture

"Your cannot outsource for 30 years, then expect a gossip site on the internet, hamburger joints and Big Boxes selling Made in China shit, to sustain a nation."


But, but, isn't that why we created the banking industry and all of their complicated "investment vehicles"?  besides, you have ignored the fact that now FaceBook shares are affordable to to masses that use its "service"!

Fri, 06/01/2012 - 10:52 | 2484090 Snakeeyes
Snakeeyes's picture

Payrolls, consumer income slowing. 10 year Treasuries BELOW 1.5%. STALL SPEED!!!!!!!!!!!!!!!

AirForce 1 Heavy Going Down!!!!!!1

Fri, 06/01/2012 - 11:00 | 2484131 CrashisOptimistic
CrashisOptimistic's picture

1.47 fucking percent on the 10 year, and people don't understand how oil supply's pinch has created perpetual deflation.

Fri, 06/01/2012 - 10:52 | 2484092 CrashisOptimistic
CrashisOptimistic's picture

"Weather reversal: There was clear evidence of a weather payback, with construction jobs down 28,000, leisure/hospitality jobs down 9,000 and temporary hiring only up 9,000. All three of these sectors had seen solid job growth during the winter."



This is stupid phrasing.

Those jobs did NOT see solid growth during the winter.  That is seasonally adjusted bullshit.  This winter was the all time record for warmth in the US and the seasonal adjustments pushed numbers higher on expectation of it being colder than it was.  People Outside Were Still Working!

The "giveback" is not a giveback.  It's just accurate.  

God, I am so tired of optimistic bullshit that is costing people enormous amounts of money.

Do NOT follow this link or you will be banned from the site!