Video Courtesy Reuters
The U.S. Bureau of Labor Statistics on Friday reported that the country’s labor market added a mere 38,000 jobs in nonfarm payroll employment in May, down from 123,000 (adjusted) in April. Labor (BLS) attributed some of the weakness in numbers to striking Verizon communications workers who took to the picket lines in April, after 10 months of contract negotiations failed to bring an accord between the communications giant and its union technicians.
Friday’s report, based on BLS data placed the 38,000 jobs addition as the worst showing since the beginning of the decade.
Employment in information declined by 34,000 in May. About 35,000 workers in the telecommunications industry were on strike and not on company payrolls during the survey reference period. – Bureau of Labor Statistics
According to an Associated Press (AP) report released prior to Friday’s report, economists estimated that employers would add 160,000 jobs for a second straight month, based upon data provided by FactSet. Unnamed economists who predicted consecutive months of job growth near 160,000 also noted it would be a solid gain, but below the average of 232,000 for the year.
That 160,000 number, though, originally reported by BLS for April employment was adjusted down to 123,000. March numbers originally reported by BLS at 208,000 were also adjusted down – to 186,000. It was unclear if the 232,000 number noted by economists was based on adjusted numbers or original numbers over the year, but it can be assumed that the 160,000 and 208,000 were included as the adjustments were only reported on Friday. The 232,000 will also need to be “adjusted.”
“The change in total nonfarm payroll employment for March was revised from +208,000 to +186,000, and the change for April was revised from +160,000 to +123,000. With these revisions, employment gains in March and April combined were 59,000 less than previously reported. Over the past 3 months, job gains have averaged 116,000 per month.” – Bureau of Labor Statistics
Regardless of the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW) strike, the numbers were notably less than predicted. AP recognized the strike in the report, although it was also unclear as to whether the strike workforce was factored into the economists’ equation. “The striking employees, now back at work, won’t be counted as employed during May – a fact that could depress job gain,” AP wrote.
“The fed might find it hard to derive a clear picture of the job market from Friday’s data.” – Associated Press
AP further noted that “the Fed might find it hard to derive a clear picture of the job market from Friday’s data.” It is hard to understand how the board and members of the U.S. Federal Reserve would have difficulty accounting for a single strike’s effect on a job’s report.
Although the strike workforce affected the May numbers, the workers clearly weren’t working and Verizon objected to any unemployment compensation for the 40,000 strikers while also canceling their medical and employment benefits. Bottom line, the numbers (that may be adjusted in later months), accurately provide a snapshot of May’s labor market.
It should also be noted that Verizon hired thousands of replacement workers during the 45-day strike, moving workers into other Labor reported categories and balancing the workforce report. And as reported by Verizon approximately 1,000 workers had returned to their positions in April, thereby included, once again as employed.
House leader, Nancy Pelosi quickly blasted out on Twitter, blaming Republican obstructionist tactics for the country’s poor jobs performance. “May’s #JobsReport is a reminder that we cannot afford more of @HouseGOP’s relentless special interest obstruction.” And Republican Presidential Candidate Donald Trump summed up the report with one word, “bombshell.”
The question remains as to whether the Fed will implement a rate hike, a possibility considered based on continued job growth and positive economic factors. “It will not be until the fall before the Fed starts thinking about raising rates again,” Brian Bethune, an economics professor at Tufts University in Boston toldMarketwatch. According to Bethune the job report was a lagging indicator and was reflective of weak growth in the first quarter. He said the U.S. central bank won’t know much about the resilience of the economy until the September meeting.
This post originally appeared on Examiner.com on June 3, 2016.