Huge Miss: Only 138K Jobs Added In May; April Revised Much Lower As Wages Disappoint

As previewed last night, the jobs "whisper" risk was to the downside, and in what was a very disappointing print released moments ago by the BLS, the whisper was spot on with only 138K jobs added in May, far below the 185K estimate, and below the lowest estimate of 140K. This was the second lowest print going back all the way to last October. Additionally, April's big beat of 211K was revised substantially lower to only 174K, suggesting that any expectation the Fed may have had of "evidence" the recent economic slowdown was transitory was just crushed.

The change in total payrolls for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. This means that over the past 3 months, job gains have averaged 121,000 per month, a far cry from the 181,000 average jobs added over the past 12 months.

To be sure, as SouthBay Research points out, a big reason for the unexpected miss was the sharp seasonal adjustment favtor, which was the biggest going back to the financial crisis days:

Not helping the Trump agenda, manufacturing jobs declined sharply, posting the weakest growth of 2017.

Looking at the Household survey revealed an even uglier picture as the number of employed workers declined by 233K to 152,923, the lowest since March.

Even worse for wage watchers, while the average hourly earnings rose by 0.2% monthly, the annual increase also missed printing at 0.2%, with April revised from 0.3% to 0.2%, while the annual increase was 2.5%, also missing the expectations of a 2.5% print. This was the lowest annual increase in average hourly earnings since March 2016.

On an absolute basis, the rebound in average hourly earnings has now fizzled completely.

While there was a silver lining in the unemployment rate which declined again to 4.3% from 4.4%, a bigger problem emerged in the participation rate which took a big step lower from 62.9% to 62.7%.

More details from the report:

Total nonfarm payroll employment increased by 138,000 in May, compared with an average monthly gain of 181,000 over the prior 12 months. In May, job gains occurred in health care and mining. 


Employment in health care rose by 24,000 in May. Hospitals added 7,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+13,000). Job growth in health care has averaged 22,000 per month thus far in 2017, compared with an average monthly gain of 32,000 in 2016.


Mining added 7,000 jobs in May. Employment in mining has risen by 47,000 since reaching a recent low point in October 2016, with most of the gain in support activities for mining.


In May, employment in professional and business services continued to trend up (+38,000). The industry has added an average of 46,000 jobs per month thus far this year, in line with the average monthly job gain in 2016. 


Employment in food services and drinking places also continued to trend up in May (+30,000) and has grown by 267,000 over the past 12 months. 


Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, showed little change over the month.  


The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in May. In manufacturing, the workweek also was unchanged at 40.7 hours, while overtime edged up by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours. 


In May, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.22. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.00. 


The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 121,000 per month. 


johngaltfla tmosley Fri, 06/02/2017 - 09:13 Permalink

Rate normalization is impossible with a $4 trillion balance sheet, $20 trillion national debt + $100 trillion in unfunded liabilities.It's inflate or die and the sniff of deflation is already in the air. Rents in SW Florida of all places are starting to creep lower and nationally demand dynamics are going to impact raw material and finished product pricing power by the end of Q3.In other words, the Fed is going to fuck up again.As usual.

In reply to by tmosley

man from glad johngaltfla Fri, 06/02/2017 - 12:09 Permalink

I submit we've already been a through a 1929 event. It is only masked by .Gov welfare, and endless printing of money. During the Great Depression the country had about 20% unemployment. And today about 20% of the population is taking .Gov assistance or program of some kind with 94 million not working. The difference is back then the dollar was backed by gold and the country had little debt. So I think what comes next is going to be very bad indeed and something we have never seen before.  

In reply to by johngaltfla

johngaltfla Dutch1206 Fri, 06/02/2017 - 11:40 Permalink

LOL, nope. Yellen is a moron. Read the book "Fed Up" to find out more. She's a total Keynsian idiot, in fact in 2007-08 until the big crash she viewed the Indymac collapse as an isolated incident and banks were "healthy" in her district at that time (California).So don't worry, she'll fuck it up again just like every other Fed has.As usual.

In reply to by Dutch1206

Mementoil Haus-Targaryen Fri, 06/02/2017 - 08:53 Permalink

Yep.Nothing has made me more Bullish on gold than the recent malaise among the gold bug community.I find it to be the best contrarian indicator.Technically speaking, gold is just a good 20-30 dollar pop away from cracking its old down trend line, extending all the way from 2011.I was waiting for a watershed event that will generate such a pop, and this might be it.

In reply to by Haus-Targaryen

Mementoil tmosley Fri, 06/02/2017 - 09:48 Permalink

Look, we are all living under the paradygm of "economy is A OK, QE was a huge success, the Fed has saved the economy and is now in the process of normalizing rates and unwinding its balance sheet".Anything which undermines this narrative has the potential to derail the whole economy.So yes, no rate hike and a possible return to QE later on this year may be watershed events.

In reply to by tmosley

spastic_colon Fri, 06/02/2017 - 08:47 Permalink

its a hard data report so no big deal; markets only care about soft data hope numbers...........uber and lyft must not be the "markets" were preordained to go up today.

Stan522 Fri, 06/02/2017 - 08:42 Permalink

Of course Trump will get them blame for this despite the obstruction from the dem's in Congress and the preoccupation of the Russia narrative.........