The May jobs report, in a word, stunk.
The 38,000 net jobs created was well below the expected 160,000 and it seemed that every sector except healthcare saw labour weakness.
Tracie McMillion and Veronica Willis, strategist at Wells, noted that downturns in the jobs report reading have often come after corrections in the stock market. This has happened six times since 2012, according to a chart from McMillion and Willis, most recent at the beginning of this year. Encouragingly, according to the strategists, each time stock have rebounded, so has the labour market.
Basically, businesses get a little worried that a drop-off in the stock market is a worrying sign of things to come or stresses corporations ability to hire as they see their value sink. This effect does not show up until a few months later, but as the market has since recovered so too will the jobs numbers.
Additionally, other economic indicators — from housing starts to jobless claims — have not yet faltered according to the Wells strategists.
“Leading economic indicators have been improving — suggesting that a recession later this year is not impending and that the economy should improve after this year’s weak star,” wrote the strategists in a note to clients
In short, McMillion and Willis believe that this too shall pass.