Good Jobs Report but Does the Market Believe It?

The markets continue to vacillate on the constant stream of news out of Iran. Nothing concrete has come out as of this writing. This has allowed markets to focus a little more on the economic news that was released this week, including the very important Bureau of Labor Statistics (BLS) Jobs Report for May.

BLS Strong Headline Growth

The BLS released the report on Friday morning. The headline showed 172,000 (seasonally adjusted) jobs were added, more than double the 85,000 that markets expected. March and April were revised higher by 93,000 jobs, bringing the 3-month average to 188,000 jobs. The non-seasonally adjusted number was a whopping 741,000.

Jobs Growth Broadens Across Industries

The source of the jobs improved slightly from recent reports. Healthcare & Social Assistance and Government still made up the lion’s share of the gains, but Leisure & Hospitality saw a 70K increase. This was expected heading into the travel months in summer.

Unemployment Improves

Looking at the Household Survey component of the report, we saw the unemployment rate remain at 4.3%. It actually fell slightly from a non-rounded 4.337% to 4.296%. Unlike recent reports, this drop wasn’t just from a decline in the labor force. This survey saw 149K in jobs created and 83K more people entering the labor force. The U-6 unemployment rate, which adds back people who want a job but have stopped trying to look for one, fell from 8.2% to 8.1%, a positive sign for the economy.

Household Survey Reveals Labor Weakness

Unfortunately, there were still a couple of sour notes found in the Household Survey. It showed that 79K full-time jobs were lost while 266K part-time jobs were created. Those at 27+ weeks as unemployed hit 1.988M, up 524,000 over the past year alone, the highest since 2021. Also, the average weeks unemployed (median) hit 11.6, also the highest since 2021. That is not what we want to see in a healthy economy.

Consumer Debt Stress Continues Rising

Some additional weakness in the economy is being felt in the level of serious delinquencies. Credit cards hit 13.1%, the highest level since 2011. Student loans are at 10.3%, the highest since 2020. Auto loans are at 5.6%, the highest on record. The personal savings rate fell to 2.6%, the lowest since 2008. Oil prices remaining elevated isn’t going to help this situation.

Looking Ahead: Important Inflation Data

• Tuesday, June 9: Existing Home Sales, ADP Weekly Data
• Wednesday, June 10: Consumer Price Index (CPI), 10-year Treasury Auction
• Thursday, June 11: Jobless Claims, Producer Price Index (PPI), 30-year Treasury Auction