"One-Offs" Pump-Up Payrolls As Supply-Chain Hiring Grinds To A Halt

The politicos are out crowing of the booming US economy confirmed by today's jobs report.

Despite a worrying retracement in the participation rate:

But, as Southbay Research explains, beneath the headline figures, payrolls are slowing...

Supply Chain Hiring Grinds to a Halt, Services Takes Over

  • Manufacturing (+4K)

  • Trade & Transportation (+5K)

No surprise here, as ISM and other data was pointing to a pullback in these sectors.

Also, the jump in Construction (+33K) was called out in our forecast. 

This is catch-up seasonal hiring and not a trend.  For May, expect additional catch-up hiring to keep this figure up.

Services Roars Ahead on One-Offs

Weakness in Trade, Transportation was offset by strength in:

  • Financial (+12K) jumped on real estate as low rates boosted home buying

  • Landscaping (+20K) on catch-up seasonal hiring

  • Healthcare (+53K) including an unusual jump in Social Services (+26K)

  • Food Services (+25K)

Of the 202K additional Services Payrolls, at least 46K is one-time and will not repeat next month (Landscaping + Social Services)

And then there's unusually strong Municpal Government Hiring

Strong one-off local government hiring (+27K) added to the party

Key Trend: Under the Headline Figure, A Payroll Slowdown is underway

  • Manufacturing retreats (+4K)

  • Construction continues (Construction + 33k, Real Estate Financial +8K)

  • Consumer spending is moderating (Trade, Transportation +5K)

  • Services Hiring is moderating.  For example, Temp Workers +17K in April but only +12K total the last 3 months

April's strong number is the final rebound from February's weakness (aka catch-up seasonal hiring). Coming up next month: Slower Payroll Growth.