Unlocking the poor US jobs report
Weak jobs in focus
April’s NFP jobs report was bad. Very bad. One aspect that was mooted around the time of the release was that there were seasonal adjustment issues impacting the data. However, it has been hard to get much specific detail that makes obvious sense.
Some other issues to consider.
- ING point out that manufacturing employment fell by 18K, trade and transport by 81K, retail fell by 15K, and temporary help by 111K.
The strange aspect of these falls is that these sectors have been performing well. So, why the job losses? Seasonal adjustments? At this stage there is only a question and an observation that something does not quite addup.
A range of factors impacting labour supply
ING point out that the National Federation of Independent Business ( a small business sector comprising of 50% of all the jobs in the US) say that business owners are struggling to fill jobs:
59% of small businesses are reported to trying to hire in April. Of these firms a huge 92% of these jobs reported few or no qualified applicants. Look at the chart below showing the difficulty there is in filling open positions.
So what we can know is this. There is demand for workers. So, this should mean that US jobs will pick up. This dip is temporary.
Reasons that labour supply is weak
Lack of child care issues and home-schooling which means some parents had to stay at home
Extended unemployment benefits means the urgency to return to work has been reduced. This was also seen in the UK labour market. These benefits are set to continue in the US until September.
The takeaway
US jobs will pick up. The demand for jobs is there. The supply will return when the unemployment benefits run out. It is hard to argue with ING’s base case that there will be a December announcement of a QE taper.
The recovery time for US jobs is simply extended, but not cancelled.