Economists are rapidly reacting to the headline miss this morning, after nonfarm payrolls increased by just 69,000 in May.One of the first out of the gate with a note is Bank of Tokyo-Mitsubishi UFJ’s Chief Financial Economist Chris Rupkey.
Although the market traded off rapidly when the report hit the wire, Rupkey says to “Keep your head on. Other data today [was] not so bad.”
From his note.
The unemployment rate went up a tenth today, but at least we don’t have to hear about how people are dropping out of the labour force. The labour force had fallen in March and April, those not in the labour force had risen. No jobs for them so they dropped out was the argument. But today, the labour force went up 642K, 422K of them found jobs, employment up, and 220K of them did not find jobs, so the unemployment level went up to 12.7 million. We cannot be too bearish then on the 8.2% unemployment rate, and this is especially true as unemployment claims are still low.
Back to payroll jobs of 69K, a disappointment, but we do not view this crawl speed as a stall speed reading for the labour market. We don’t think jobs will actually decline, say next month, and keep in mind a double-dip or recession for the economy is signaled by three consecutive declines in payroll jobs.
Nonetheless, Rupkey understands how the tenor of the report underscores the middling recovery taking place. He awaits Bernanke’s outlook on June 7 for possible hints of QE.