Squishy jobs

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What to make from the latest jobs report?

After the April jobs report which showed an increase of around 250,000 jobs, and expectations that the non-farm payroll would increase around 150-175,000 jobs, the creation of only 54,000 jobs in May is a huge disappointment — especially coming a full year after the Summer of Recovery.

Of course, there are snarky responses, and lots of people I’ve spoken to this morning have focused on the fact that the hiring announcement from McDonald’s nominally constituted May’s entire job growth number.

The more meaningful response is what we gave to Mark Mardell of BBC TV: There is just a ton of uncertainty out there. The economy’s growth rate is slowing, and we know that “qualitative easing I” and QEII are not the way to grow jobs. Everyone thinks that the party has to end, that further QE actions are not sustainable.

Then there are worries about the impact of high energy prices on business and job growth. Add to those worries, the continued slide in housing prices.

Usually, we deal with one of these big uncertainties. But to add them all up, and further to tie a tightly knotted bow of new uncertainty about 17% of the marketplace (health care) because of a gigantic new law, well, that’s something altogether new.


I’ve been pretty focused on manufacturing and construction industries in my conversations this week in the run-up to this report, and what I have found is pretty simple. It’s a question of confidence. Lots of manufacturers and builders could use the additional help, but they don’t know if they can carry new employees into the winter. So, especially in this state, with its unemployment insurance costs, you don’t want to hire now just to let go of folks in the late fall, when the construction season on its own already cools off, even in normal times. So you do more with less. You don’t hire.

Of course, the calculus is different for other high-tech, highly technical sectors, where the weaker dollar makes our products more attractive, but where the companies often cannot find the qualified employees they need.

Finally, it’ll be interesting to watch world markets today and Monday. In the current climate, when markets are a tad emotional (beyond the usual “animal spirits”), these numbers will generate angst amongst the traders.