Market Overview

US Jobs Picture: Sluggish, Unemployment Rate 8.1%

The Wall Street Journal reported Friday that "US job growth slowed again in April, a fresh sign that the economy could be settling into a sluggish spring." Whereas the unemployment rate fell to 8.1 percent while nonfarm payrolls grew by 115,000 in April, current statistics portend a lackluster labor market.

According to the Wall Street Journal, "If the labor market stalls, the Fed could reconsider measures to stimulate the economy." Interestingly, "Friday's report showed that private companies again fueled the growth, adding 130,000 jobs. Governments, meanwhile, cut payrolls by 15,000." In addition, "[w]ages inched ahead", being up 1.8 percent year over year. From the article: "The average workweek was unchanged at 34.5 hours." The broader measure of unemployment, known as the U-6, remained unchanged at 14.5 percent.

According to a WSJ blog from Phil Izzo, this month's "decline in the jobless rate wasn't a positive sign, as it primary came from people dropping out of the labor force." Izzo: "In April, the number of unemployed dropped by 173,000, but so did the number of people employed -- by 169,000. That indicates that those people didn't necessarily find new jobs, since the overall labor force declined by 342,000."

Per CNBC's analysis, "Though the headline number indicated job creation, the total employment level for the month [of April] fell 169,000. The disparity likely emanates from a drop in the labor force participation rate -- or the level of Americans actively looking for jobs or otherwise employed -- from 63.8 percent to 63.6 percent, its lowest level since December 1981." CNBC also reported that "[t]he market had been expecting a weak jobs number after successive weeks of elevated new jobless claims, while a report earlier this week from ADP showed that private sector hiring continued but at a weakened pace." Whereas some have criticized the government's numbers, interestingly Gallup's polling "showed the unemployment rate without seasonal adjustment fell from 8.4 percent to 8.3 percent in April" whereas reports from Gallup and the Bureau Labor Statistics "have more closely converged in recent months".

The ominous specter in the room regarding Friday's labor statistics was labor force participation. Per Zero Hedge's Tyler Durden, "It is just getting sad now." Durden: "In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record." Durden's post cited two charts portending serious issues in the US labor market as the labor force participation rate has fallen to levels not seen since the early 1980's. You know, the early 1980's -- that time period when Return of the Jedi, Cyndi Lauper's "Girls Just Want To Have Fun", and Soft Cell's "Tainted Love" were released. To put things into perspective, we are chronologically closer to when the Kansas City Royals won the World Series than the last time the labor force participation rate fell to such levels. The Royals have only had three winning seasons over the course of the past 20 seasons. Yikes.

Whereas investors may have been looking for definitive signs of economic recovery, CNBC reported prior to the opening bell at 8:31 AM that "Wall Street reacted little to the report, with stock market futures indicating a flat to slightly lower open." After the opening bell, CNBC reported that "[s]tocks slumped" with the Dow Jones Industrial Average slipping at the open in response to the report. Whereas NPR's David Greene commented Friday morning that "the crystal ball is particularly cloudy this month" in light of the anticipated jobs numbers and the hope for economic recovery, CNBC reported that The BlackBayGroup's Todd Schoenberger said regarding Friday's report, "It's crystal clear that the economic recovery is in doubt -- you have an economy that is in need of organic growth and you're not getting it from these reports." Though the unemployment rate has fallen to 8.1 percent, the drop in the labor force participation rate portends much deeper socio-economic problems.

Posted-In: CNBC News Wall Street Journal Econ #s Hot Markets Media Best of Benzinga

 

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