A Dismal Job Report

In the last 2 days, one question that lingered in market participants' minds has been whether the market has priced in a poor job report schedule today following an anemic ADP private payrolls report on Wednesday. The market gave a resounding answer this morning,  "NO. Not this much." The market opened down with triple-digit loss again in the Dow Jones Index with a dismal Employment Situation Report.

Nonfarm payroll employment in May grew a modest 54,000, following a revised 232,000 jump in April and a 194,000 increase in March, far lower than analysts' revised forecast for a 170,000 expansion.  Private nonfarm payrolls advanced 83,000 in May, following a 251,000 increase in April, also far lower than the median forecast of a 180,000.

From Wall Street Journal,

Sluggishness in payroll jobs was broad based...................................

Goods-producing jobs edged up 3,000, following a 38,000 rise in April. Manufacturing jobs dipped 5,000 after a 24,000 advance the month before. However, construction nudged up 2,000 after a 5,000 increase in April. Mining gained 7,000, following an 11,000 boost in April.

Private service-providing jobs slowed to an increase of 80,000 after a 213,000 jump the prior month. There was not much to write home about as the biggest component gain was for professional & business services with a 44,000 increase in May. Health care rose 17,400 for the latest month. On the down side, retail trade fell 8,500 while leisure & hospitality dipped 6,000.

Government jobs contracted 29,000, following a 19,000 dip in April. This latest decrease was largely local government, led down by local government education.

On a positive note, wage growth improved in May as average hourly earnings rose 0.3 percent, following a 0.1 percent uptick in April. May's number topped the median forecast for a 0.2 percent increase. The average workweek for all workers in May held steady at 34.4 hours.

On a year-ago basis, overall payroll jobs in May eased to 0.7 percent, down from a 1.0 percent pace the month before.

Turning to the household survey, the unemployment rate nudged up to 9.1 percent from 9.0 percent in April. Household employment actually rose 105,000 for the month but was outpaced by a 272,000 gain in the labor force.

The big question is whether the May numbers are a temporary soft spot or a new trend.