Last Week’s Employment Number
So we’re late with this. So sue us. Many times we won’t write about things that have already been analyzed to bits, simply because we have nothing to say. But after reading the loads of commentary on the jobs data, we wanted to say that there is nothing to say. Too many people are trying to say something, and the noise is distorting reality.
Barry Ritholtz said “Today’s NFP number stunk the joint up: 75,000.”
Bill Cara believes it is “a spectacular report for a rally in equities and bonds,” but thinks it is unreliable. “As I see it, this report is an insult to society. We need reports that we can trust.” For our take on the unreliability, one of our very first posts dealt with the wide margin of error in this report.
Bloomberg’s John Berry said “the Labor Department said the number of payroll jobs rose only 75,000 in May and revised down April’s gain to 126,000 from 138,000. These figures, along with a drop last month in the total number of hours worked, provided powerful support for the argument that growth is slowing.”
The Capital Spectator says “One month is not a trend, of course, although a longer-term inclination is. Consider that the rolling 12-month percentage change in monthly nonfarm payrolls has been looking tired for some time.”
CNN Money says the report makes things tougher for the Fed.
There are more perspectives at Calculated Risk, but you get the idea. The report was really bad, clearly shows a slowing economy and may encourage the Fed to pause. This, ironically, might be good for stocks.
So how bad was this report? The chart below shows the year/year percentage change in employment for the last two years. It has indeed been slowing for several months. From 1.6 percent year/year to 1.4 percent year/year. And all of the change is well within the margin of error for the report.
Everything you have read has been much ado about nothing.
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