BLS Employment Situation: 38,000 jobs added to the economy in May. Unemployment rate declines to 4.7%.

The assessment of the labor market, not to mention the outlook for consumer spending, just came down as nonfarm payrolls proved much weaker than expected in May, up only 38,000 with the two prior months revised a total of 59,000 lower. The Verizon strike is a negative in the data but not a decisive one, pulling down telecommunication payrolls by 37,000 in a loss that will be reversed in coming reports now that the strike has been resolved.

The labor force as measured by the household survey shrank sharply, in turn driving down the unemployment rate by 3 tenths to a 4.7 percent level that embodies monthly weakness, not strength, in the labor market. The labor force participation rate, after having shown life in prior months, is down 2 tenths to 62.6 percent.

Earnings data are soft with average hourly earnings up only 0.2 percent with the year-on-year rate unchanged at a less-than-inflationary 2.5 percent. The average workweek is at 34.4 hours with the prior month revised 1 tenth lower to 34.4 as well.

Payrolls by industry show wide declines apart from telecommunications. Construction spending has been strong but construction payrolls, at minus 15,000, are down for a second month. Manufacturing payrolls, which have been consistently weak, are weak again, down 10,000 in the month. And mining payrolls extended their long contraction, also down 10,000 in the month. Of special note, temporary workers fell 21,000 but in a reading that could have been affected by the Verizon strike. On the positive side are government payrolls, up 13,000 in the month, and retail trade, up 11,000.

But positives are very hard to find in this report. Throw out any chance of a rate hike at this month's FOMC and look for Janet Yellen, in her appearance on Monday, to offer an explanation for the sudden downgrade to the economic outlook.

boards of FL wrote:http://www.bls.gov/news.release/empsit.nr0.htm

http://mam.econoday.com/byshoweventfull.asp?fid=472116&cust=mam&year=2016&lid=0&prev=/byweek.asp#top

The assessment of the labor market, not to mention the outlook for consumer spending, just came down as nonfarm payrolls proved much weaker than expected in May, up only 38,000 with the two prior months revised a total of 59,000 lower. The Verizon strike is a negative in the data but not a decisive one, pulling down telecommunication payrolls by 37,000 in a loss that will be reversed in coming reports now that the strike has been resolved.

The labor force as measured by the household survey shrank sharply, in turn driving down the unemployment rate by 3 tenths to a 4.7 percent level that embodies monthly weakness, not strength, in the labor market. The labor force participation rate, after having shown life in prior months, is down 2 tenths to 62.6 percent.

Earnings data are soft with average hourly earnings up only 0.2 percent with the year-on-year rate unchanged at a less-than-inflationary 2.5 percent. The average workweek is at 34.4 hours with the prior month revised 1 tenth lower to 34.4 as well.

Payrolls by industry show wide declines apart from telecommunications. Construction spending has been strong but construction payrolls, at minus 15,000, are down for a second month. Manufacturing payrolls, which have been consistently weak, are weak again, down 10,000 in the month. And mining payrolls extended their long contraction, also down 10,000 in the month. Of special note, temporary workers fell 21,000 but in a reading that could have been affected by the Verizon strike. On the positive side are government payrolls, up 13,000 in the month, and retail trade, up 11,000.

But positives are very hard to find in this report. Throw out any chance of a rate hike at this month's FOMC and look for Janet Yellen, in her appearance on Monday, to offer an explanation for the sudden downgrade to the economic outlook.