Friday, June 6, 2014
Today’s broadly in-line jobs report will likely provide further fuel for this market, pushing it further into record territory. The market’s strong momentum in this otherwise seasonally weak period has surprised many, particularly when viewed in conjunction with the bond market’s performance.
A total of 217K jobs were created in the economy, modestly ahead of consensus estimates and what we saw from the payroll processor ADP on Wednesday. There weren’t any major revisions, with April’s blockbuster tally revised down a tad and March’s numbers remaining unchanged.
The private sector added 216K in May, down from 270K in April, with the gains coming particularly strongly from professional and business services (up +55K in April), and health (54.9K). The construction sector added 6K jobs in May, down from 34K in April, providing further evidence that this space is losing momentum. Manufacturing jobs were modestly up from the April level, contrary to what the employment sub-component of Monday’s ISM survey showed.
The unemployment rate remained unchanged at 6.3%. Average hourly earnings increased to $24.38 from $24.33 in April, while the average work week remained unchanged at 34.5 hours. Average hourly earnings have gone up +2.1% over the past 12 months. The labor force participation rate remained unchanged from April’s at 62.8%. The participation rate had dropped big in April, contrary to expectations that an improving labor market would prompt previously discouraged workers to rejoin the labor force and start looking for work.
This is a good, but not a great report. Yes, the economy has bounced back from the winter slump, but the rebound hasn’t been as robust as some of the more aggressively optimistic estimates have been projecting.
Director of Research
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