BREAKING NEWS – Gov’t Data Shows Significant Reduction in Job Growth

Department of Labor logo Jobs reportThe US Department of Labor reported this morning that non-farm jobs grew by 75,000 in May. According to a Wall Street Journal survey of economists, the May jobs number was expected to come in at 180,000 – so this is a large and surprising miss.

See more on this surprising jobs result…

Strata-gee reported yesterday that on Wednesday the ADP National Employment Report for May showed a surprisingly big decline in employment gains and that this news surprised economists – and it put a big focus on today’s government data release. Many economists are suggesting that this jobs miss is the clearest evidence yet of an impending economic slowdown.

Although the unemployment rate remains unchanged at 3.6%, there is no muting the impact of the dramatic job growth miss as shown by both the ADP survey and the government’s report. The ADP survey showed growth at 27,000 jobs in May, while the Labor Department reported 75,000. Both of these initial numbers are subject to revision which will likely move them even closer.

The fact that both of these surveys report a dramatic slowdown in job growth will only turn Wednesday’s red flag into today’s bright and shining crimson one. It is likely that the Fed, who has recently signaled that they stand ready to move back into a stimulus mode if they believe the economy is slowing, will have to at least consider easing interest rates with this news. The Fed had been increasing rates over the last year or so in a move away from stimulus and towards a more normal monetary policy.

This swing to the negative in employment combines with some other troubling housing data to suggest there is a gathering economic storm. To be sure, one month’s data is not a trend. But it certainly adds to the other signs to suggest trouble may be coming.

About Ted

A sales and marketing specialist - primarily in the technology industry - I've experienced a sort of "circle of life" in business. I've been a mass merchant retailer, a specialty retailer, a specialty manufacturer, a large volume manufacturer, a distributor, and even represented sales representatives. Now the owner of a marketing company that works with a variety of businesses on improving their strategic marketing and business development - I analyze issues from all angles to develop holistic solutions.

Comments

BREAKING NEWS – Gov’t Data Shows Significant Reduction in Job Growth — 4 Comments

  1. Ted job growth slows when you at or near full employment. It is not a problem unless total employment goes down.

    • We’ve been at or near “full employment” based on the historical definition of that concept now for almost 2 1/2 years. This is thanks to the current, and historically long, expanding bull economy. Expanding economies grow jobs which is why economists carefully watch job growth. And it is viewed as a sign of a potential “turn” in the economy when it suddenly slows or declines, as it did in May. This is why economists freaked out when both the ADP and government numbers both came out showing a dramatic decline in the number of jobs added.

      We’ll see if that statistic corrects itself when the numbers for June are tabulated.

      THANKS for reading…and for your comment.

      Ted

      • Ted,

        I doubt any economist freaking out. Personally I use railroad cars and locomotives in storage. Far more accurate. I have a picture of Union Pacific locomotives stored in Benson Arizona June 26, 2016. It is a mile and a half long of road worthy engines stored because of a lack of business.

        I will take another picture in a couple of weeks but I already know there aren’t many. Nor are there many railroad cars stored up in Oregon. I’ve been through the area six times in the last six months.

        Housing can be another matter of course.

        • Stephen,

          “Freaking out” is my assessment, based on following economic data closely for years – and seeing their strong reaction to the surprising drop in employment gains in several published reports. These guys are bean counters that are usually boring and monotone in describing economic moves. You may choose a different term, but many seemed truly surprised when the ADP numbers came out, with some colorful quotes in the financial press. And it added some drama to the official labor department announcement two days later.

          Regarding your railroad yardstick…it certainly is one measure for sure. However, hard to say how accurate it is. Railroads have long been losing market share to trucking and that yard may be empty because the railroad cut their inventory of unneeded rolling stock (and iron horses)…or perhaps it only serves a small portion of the country. You’d really have to know more details about the freight moving through the yard to be able to compare it to the general economy.

          Still, I take your point that it is one indicator for sure. Unfortunately our economy is large and complex with many forces generating waves of impact on other sectors. Hard to use any one indicator to define the entire economy…even slowing jobs growth.

          It’d be interesting to see your photos though. If you start putting out regular economic reports (based on your tracking the local train yard utilization) I might include them in my analysis if they appear to actually represent economic movement!

          THANKS!

          Ted

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