May 2021 BLS Jobs Situation - Job Gains Good But On The Low Side Of Expectations

The headline seasonally adjusted BLS job growth was on the low side of expectations, with the unemployment rate worsening from 6.1 % to 5.8 %.

Analyst Opinion of the BLS Employment Situation

Although this is a good report, analysts expected better.

The economically intuitive sectors were mixed for economic growth.

The rate of further recovery will be dependant on the coronavirus and the knock-on effects.

  • The year-over-year rate of growth for employment accelerated by 2.9 % this month (red line on the graph below). The year-over-year growth rate is 10.4 % above the rate of growth one year ago. [all due to comparison to the lockdown one year ago]

  • This month's report internals (comparing household to establishment data sets) somewhat correlated with the household survey showing seasonally adjusted employment grew 444,000 vs the headline establishment number growing 559,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view - the common element is job growth - and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL job growth, not just non-farm).
  • The household survey removed 53,000 people from the labor force which explains the improvement in the unemployment rate.
  • The NFIB statement on employment at the end of this post.

A summary of the employment situation:

  • BLS reported: +559K (non-farm) and +492K (non-farm private). The headline unemployment rate improved from 6.1 % to 5.8 %
  • ADP reported: an employment growth of 978,000 (non-farm private)
  • In Econintersect's May 2021 economic forecast released in late April 2021, we estimated non-farm private payroll growth at 300,000 (based on economic potential)
  • The market expected (from Econoday):
Seasonally Adjusted Data Consensus Range Consensus Actual
Nonfarm Payrolls - M/M change 400,000 to 950,000 645,000 +559,000
Unemployment Rate - Level 5.7 % to 6.0 % 5.9 % 5.8 %
Private Payrolls - M/M change 350,000 to 750,000 600,000 +492,000
Manufacturing Payrolls - M/M change 12,000 to 55,000 29,000 +23,000
Participation Rate - level 61.8 % to 61.8 % 61.8 % 61.6 %
Average Hourly Earnings - M/M change -0.3 % to 0.5 % +0.2 % +0.5 %
Average Hourly Earnings - Y/Y change -0.4 % to 1.8 % +1.2 % +2.0 %
Avg Workweek - All Employees

34.9 hrs to 35.0 hrs

35.0 hrs 34.9 hrs

The BLS reports seasonally adjusted data - manipulated with multiple seasonal adjustment factors, and Econintersect believes the unadjusted data gives a clearer picture of the job situation.

The following chart compares the job gains/losses this month with the same month historically.

Cumulative employment growth this year is +1,611,000

The last month's headline employment gains were little changed. Generally speaking, the INITIAL employment gain estimate is overstated when the economy is slowing and understated when the economy is accelerating.

Concentrating on the labor force growth Vs. employment growth - it should be noted that the trend shows that the slack between labor force growth and employment growth was narrowing slowly before the coronavirus hit.

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