Lots of Confusion on the Latest Jobs Report
The New York Times headline is ominous: “A Weak Jobs Report Poses a New Challenge to Trump: A Slowing Economy.”
The article goes on with a very disconcerting message:
“The increase was a far cry from what economists had expected and a fraction of the number of jobs created in April. The weakness was most evident in sectors that depend on exports, and analysts were quick to blame Mr. Trump’s tariffs on China and other countries.”
It goes on:
“Nor was the news all bad. Unemployment was unchanged at 3.6 percent, the lowest that number has been in about 50 years. And average hourly earnings increased by 0.2 percent, which was less than expected but better than earlier in the recovery.
“Monthly jobs data can be volatile, with big swings already in January, February and March of this year. But the slow pace of hiring in May followed other disappointing indicators. Oil prices and yields on Treasury bonds have both plunged, which suggests traders expect slower growth.”
Members of Congress and other policy leaders have expressed concern about the situation.
Today, the leading Republican on the powerful House Ways and Means Committee Kevin Brady (R-TX) released the following statement in response to the Labor Department’s May 2019 jobs report:
“These numbers are less than hoped for but not surprising given the uncertainty over global trade tensions and a dysfunctional Congress led by Democrats obsessed with investigations, impeachment, and raising taxes rather than working with Republicans to solve America’s challenges. The three-month average of 151,000 jobs is still healthy and will grow as trade issues are resolved — including passage of the new United States-Mexico-Canada Agreement.”
To provide context, the Congressman noted “the U.S. Department of Labor reported today that the economy added 75,000 jobs in May. The unemployment rate was 3.6 percent.”
Is the alarming headlines warranted? That is doubtful.
The reality is, the “bad” jobs report is not a reflection of a weak economy, but one that may be too robust. The reality is, with 3.6 unemployment, it will be increasingly difficult to achieve (the never achieved nor considered achievable) 0 percent. Simply put, the lower it goes, the more difficult it is to go lower.
Marketwatch reports:
“Is there really a shortage of skilled workers available for hire? Small-business owners certainly seem to think so.
“Some 24% of small-business owners said finding qualified workers is their single biggest problem, according to an April survey by the National Federation of Independent Business. That’s just one point below a record high.
“Nearly three-fifths of the small businesses surveyed last month said they hired or tried to hire more workers, but 86% reported ‘few or no qualified applicants for positions they were trying to fill,’ the NFIB said.”
There is no doubt the tariffs are problematic, and if those policies persist they will create a serious issue, but they are not an issue yet. The most recent jobs report is a reflection of nothing more than good old fashion “supply and demand.” The demand for employees simply outpaces the supply.
