Friday, May 7, 2021

Jobs Report: Analysts React (coherence supplied by Izabella Kaminska)

This report, and the reports due in June, July and August are setting-up the dynamics for a tremendous burst of wealth building. 
More on that next week but first the 30,000 foot (9.14 km) view.

From FT Alphaville: 
The jobs report no one saw coming
Harry Hindsight analysis recognises there may be an under appreciated issue with worker supply not demand. 

Friday’s US non-farm payroll numbers came in massively under expectation at 266,000 jobs added versus a projected 1m. The unemployment rate rose to 6.1 per cent versus 6 per cent. And average hourly earnings were up 0.7 per cent month on month versus an expected zero consensus. Since nobody in the analyst community saw the mega miss coming we thought we’d check in with what the latest commentary from our inbox is saying.

First it’s over to James Knightley, chief international economist at ING, whose assessment is basically humph: 

Private payrolls rose just 218k with manufacturing employment actually falling 18k while trade and transport dropped 81k, retail fell 15k and temporary help fell 111k. 

These falls are all more than a little strange given the strong performance of all these sectors, activity wise, over the past couple of months. Construction employment being flat on the month is also odd given the booming residential construction sector that is more than offsetting weakness elsewhere. 

On the positive side leisure and hospitality rose 331k, reflecting the reopening while government employment rose 48k, but even this is disappointing given the strength in spending the economy is experiencing. 

Looking at the non-seasonally adjusted data employment rose 1.1mn after 1.2mn gains in February and March, so the only other thing will can possible argue is that there may be some seasonal adjustment issues given pandemic-related distortions, but we have no real proof. 

 Though Knightley does pick up on the important trend that employers are struggling to find workers:...