Last Friday’s (May 7) employment release from the Bureau of Labor Statistics (BLS) undershot projections in one of the largest “misses” in the history of the data series.
Most estimates had job increases coming in at 1 million, with low-side estimates around 750,000. Actual reported job creation, on a seasonally adjusted basis, was about 25% of projections. The March numbers were also revised to the downside, falling from 916,000 jobs added to a revised figure of 770,000.
The BLS report said, in part,
Sources: Trading Economics, Bureau of Labor Statistics
The unemployment rate rose to 6.1% in April versus projections for 5.8%, which some analysts attributed to a shortage of qualified or willing job candidates and a slight increase in the labor participation rate (to 61.7% from 61.5% in March). Other analysts also cited ongoing COVID health-related concerns and the difficulty for many potential workers to deal with child-care issues for school-age children.
Source: Bureau of Labor Statistics
Statistics from Bespoke Investment Group indicated that some of the jobs gains in leisure and hospitality and some other lower-paid sectors might be attributed to employers actively seeking to add workers through wage increases:
Sources: Bespoke Investment Group, Bureau of Labor Statistics
At least for one trading day, U.S. equity markets more than took the jobs numbers in stride.
According to CNBC, JJ Kinahan, chief market strategist at TD Ameritrade, said, “It certainly takes the pressure off the Fed and takes an imminent rate increase off the table. We’re not going to see inflation in wages, and we don’t have as many people employed as we thought, so we have to keep the party going.”
The report intensified the political argument over recent stimulus checks and the extension of supplemental unemployment benefits. The Biden administration essentially called the report proof of the need for such benefits in a lengthy economic recovery, while some prominent Republicans cited the belief that enhanced unemployment checks continued to provide a disincentive for pre-pandemic employed workers to look for work.
Some observers questioned the accuracy of the jobs data, citing the generalized effects of the pandemic on data collection, the unreliability of “outdated” seasonal adjustment factors, and the difficulty of fully accounting for “gig economy” workers on a month-to-month basis.
Chicago Fed President Charles Evans provided an interview to CNBC on May 10, summarized here:
Minneapolis Fed President Neel Kashkari provided more emphatic comments in an interview with Bloomberg, “For all those people who have been saying ‘oh my gosh, the Fed needs to normalize quantitative easing,’ today’s job report is just an example of—we have a long way to go.”
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