Global| Jun 03 2016U.S. Payroll Growth Disappoints
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm payrolls grew just 38,000 (1.7% y/y) during May
Nonfarm payrolls grew just 38,000 (1.7% y/y) during May following downwardly revised gains of 123,000 and 186,000 during the prior two months. Revisions subtracted a combined 59,000 from April and March. It was the smallest increase since September 2010. A 154,000 increase had been expected in the Action Economics Forecast Survey. The strike by Verizon workers subtracted roughly 30,000 from last month's increase. Weaker job growth readings were widespread. The unemployment rate declined to 4.7% versus an expected 4.9%. The overall unemployment rate, including marginally attached and part-time for economic reasons, held steady at 9.7%. Average hourly earnings rose an expected 0.2% (2.5% y/y).
Employment results were disappointing across sectors. Factory payrolls fell 10,000, construction employment declined 15,000 and mining payrolls fell 10,200. In the service sector, private employment rose 61,000, the weakest rise since June 2012. With Verizon workers added back in, the 91,000 worker increase still would have been the weakest since December 2013. Government sector payrolls rose 13,000.
The average workweek held steady at 34.4 hours, down from the expansion high of 34.6 in January.
Average hourly earnings increased 0.2% following a downwardly revised 0.4% increase. The y/y increase of 2.5% remained up from 1.9% during all of 2012.
The unemployment rate's decline reflected a 26,000
worker increase (1.5% y/y) in employment, and a 458,000 decline (+0.7% y/y) in
the labor force. The labor force participation rate declined to 62.6%, it's
lowest level since December, and down from the March high of 63.0%.
The labor market data is contained Haver's USECON database. Detailed
figures are in the EMPL and LABOR databases. The expectations
figure is in the AS1REPNA database.
Employment: (SA, M/M Change,
000s)
May
Apr
Mar
May Y/Y
2015
2014
2013
Payroll Employment
38
123
186
1.7%
2.1%
1.9%
1.6%
Previous
--
160
208
--
--
--
--
Manufacturing
-10
2
-29
-0.3
1.1
1.4
0.8
Construction
-15
-5
37
3.4
4.8
5.0
3.7
Private Service-Producing
61
144
174
2.2
2.5
2.1
2.1
Government
13
-7
19
0.5
0.5
0.0
-0.3
Average Weekly Hours - Private Sector
34.4
34.4
34.4
34.5
(May'15)34.5
34.5
34.5
Private Sector Average Hourly Earnings
(%)
0.2
0.4
0.2
2.5
2.3
2.1
2.1
Unemployment Rate (%)
4.7
5.0
5.0
5.5
(May'15)5.3
6.2
7.4
U.S. ISM Nomanufacturing Index Declines Unexpectedly; Prices Firm
by Tom Moeller June 3, 2016
The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) declined to 52.9 during May versus an unrevised 55.7 in April. It was the lowest level since February 2014. Consensus expectations had been for a rise to 55.3 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where readings above 50 indicates expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Tuesday. It fell to 52.7, the lowest level since August 2012. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.
Amongst the component series, the business activity reading fell to 55.1, the lowest reading since January. New orders dropped sharply to 54.2. The employment index fell below break-even to 49.7 following two months above 50. During the last ten years, there has been a 96% correlation between the employment index and the m/m change in service plus construction payrolls. The supplier delivery index increased to 52.5.
The prices paid series increased to 55.6, the highest level since September 2014. Twenty four percent (NSA) of respondents paid higher prices while 7 percent paid less.
The export order series (NSA) fell to 49.0 and the imports series eased to 53.5. The order backlog figure fell to 50.0 and remained down versus a high of 56.5 last August.
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | May | Apr | Mar | May'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 52.9 | 55.7 | 54.5 | 55.9 | 57.1 | 56.2 | 54.6 |
| Business Activity | 55.1 | 58.8 | 59.8 | 59.9 | 60.8 | 59.7 | 56.6 |
| New Orders | 54.2 | 59.9 | 56.7 | 58.0 | 59.2 | 58.6 | 55.8 |
| Employment | 49.7 | 53.0 | 50.3 | 55.8 | 56.1 | 54.9 | 54.3 |
| Supplier Deliveries (NSA) | 52.5 | 51.0 | 51.0 | 50.0 | 52.5 | 51.8 | 51.7 |
| Prices Index | 55.6 | 53.4 | 49.1 | 54.0 | 50.7 | 56.8 | 55.7 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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