Economist Dean Baker is ready to call the May non-farm payrolls report that’s due out on Friday: It’s going to be terrible.
100,000 jobs on Friday. You heard it hear first — that’s what I e-mailed to a colleague last night before the weak ADP report.
— Dean Baker (@DeanBaker13) June 5, 2013
That would be a big miss: the consensus estimate for Friday’s Bureau of labour Statistics report is 175,000 jobs, and job growth has averaged 180,000 over the last 24 months. But today’s ADP jobs report came in way below expectations: 135,000 added jobs versus an expectation of 165,000.
We emailed Dean to ask him why he’s such a jobs bear. The main takeaway is that 2 per cent GDP growth isn’t enough to support the current pace of job growth, and so job growth is going to have to slow. Here’s his full email:
I don’t expect much action on the goods side of the market — we had essentially zero growth there last month and likely a small negative this month (shrinking manufacturing).
I think last month’s growth in personal and business services was an aberration, which means that there will be some mean reversion with low or even negative growth this month. Restaurant and retail employment growth were also unusually high, so I look to lower numbers there as well.
There were no obvious aberrations on the low side last month, except the information sector had a very small loss — that may revert upward, but it won’t offset downward shifts elswehere. So I’d put 100,000 as my best guess.
BTW, with GDP growth hovering around 2.0 per cent, we really shouldn’t expect much employment growth. It wasn’t too long ago that we had productivity growth higher than this.
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