INDICATOR: May Employment Report
KEY DATA: Payrolls: 175,000: Private Sector: 178,000; Unemployment Rate: 7.6% (up 0.1 percentage point)
IN A NUTSHELL: "If you want to know the definition of boring, just look at the May employment report, which told us nothing."
WHAT IT MEANS: The all-important, always carefully dissected employment report was released and it was as humdrum as it gets. Payrolls rose by a little more than consensus but not by so much that we could get exited let alone irrationally exuberant. Indeed, over the past three months, total job gains average only 160,000. That is disappointing. The distribution of the hiring was somewhat confusing. Solid increases in retailing and restaurants would imply consumers are out hitting the malls and spending money. But declining manufacturing and transportation and warehousing payrolls point to a more sluggish economy. Temporary help is rising, usually a good sign, but jobs in the health profession are increasing less than expected. The ACA is expected to be a boon for medical service providers and that is starting as ambulatory care employment jumped. However, hospitals are cutting back. As for sequestration, federal employment is dropping rapidly even when you exclude the incredibly shrinking postal service. Local governments have started hiring again. The unemployment rate rose in May, in part because of an increase in the workforce. In reality, the rate "surged" from 7.51% to 7.55% a "huge" 0.04 percentage point increase. In other words, we're talking nothing here. Nevertheless, with less than stellar job gains, the still too high unemployment rate is keeping wage gains down. With basically flat wages and hours worked, income growth should be modest and that does not bode well for consumer demand.