BLS Numbers Disappoint: 138K New Jobs

Friday, June 2nd, 2017

The hotly anticipated Bureau of Labor Statistics (BLS) monthly non-farm payroll numbers disappointed ahead of the bell this morning: 138K new jobs were reportedly produced in the month of May, as opposed to 184K expected in consensus. Revisions to the two previous months fell by another 66K overall: April went from 211K in its initial read to 174K today; March went from 79K to 50K. The unemployment rate, however, fell 10 basis points to 4.3% – the lowest in 16 years.

There were 233K fewer employed people in the month, at a 62.7% labor force participation rate, also down a bit. The underemployment read, the U-6, did fall to a historically low 8.4%, which is one of the few good numbers to hit the tape from this report this morning. Also, average hourly earnings raised 0.2%, which is also favorable. But this overall headline and looking into the details is far less than what analysts had been expecting.

The private sector brought in just 147K new jobs. Consistent with the ADP ADP report was significant growth in new Construction jobs. Today’s narrative would give credence to those business owners who’ve said for awhile now that finding people to fill job openings has gotten much more difficult as skill-sets grow stricter and unemployed workforce participants don’t possess the desired capabilities to satisfy the positions.

These numbers really fly in the face of yesterday’s ADP private-sector jobs report, where a robust 253K was reported. Both the ADP and BLS estimates were around the 180K number, and each report surprised to pretty much the opposite side of the spectrum. This is perhaps the biggest surprise of all – that expectations for the BLS report had actually ratcheted up toward 200K following the big ADP headline, only to disappoint even more severely this morning.

Usually, these two surveys grow closer on subsequent revisions; however, the downward March and April reads looks to pull these narratives further out of parity. This may create confusion in the markets today, which is dwindling from a likely positive open to roughly unched at this hour.

Mark Vickery
Senior Editor

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