May Payrolls Soar By 339K Blowing Away Highest Estimate Even As People Employed Actually Tumble By 310K
With consensus expecting a modest payroll drop from 291K to 195K, the whisper number coming in alittle higher at 225K and Goldman’s trading desk nfp matrix as follows: “a print sub 100k likely hits the tape by ~100bps and a print north of 375k hits the tape by 25 – 50bps“, literally nobody was expecting a print above 252K which was the highest forecast among economists, moments ago the BLS reported yet another blowout stunner: according to Biden’s Dept of Labor, in May the US added a whopping 339K jobs, almost double the median estimate and well above the highest forecast.
There were of course, revisions, with the March payrolls change revised up by 52,000, from +165,000 to +217,000, and the change for April was revised up by 41,000, from +253,000 to +294,000. With these revisions, employment in March and April combined is 93,000 higher than previously reported.
Going back to the May print, not only was this a 4 sigma beat to expectations…
… but it was the 12th beat of expectations in the past 13 months.
And yet, while the Establishment survey was a blowout beat and the strongest print since January, the Household survey unexpectedly tumbled by the most since April 22 as it plunged by 310K jobs…
… pushing the divergence between the two series back to near record wides…
… and resulting in a 0.2% jump in the Unemployment rate which rose from 3.4% to 3.7%.
The less volatile (and manipulated) participation rate came in as expected at 62.6%, unchanged from last month.
And another paradox: despite the blowout payrolls number, in May both full-time and part-time workers dropped, by 220K and 23K, respectively.
Turning to wages, the sequential print of 0.3% came in line with expectations (and a drop from last month’s downward revised 0.4%), while the YoY print of 4.3% was just below the 4.4% expected increase and down from 4.4% last month
The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.3 hours in May. In manufacturing, the average workweek was unchanged at 40.1 hours, and overtime edged up by 0.1 hour to 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.
Some more details from the BLS:
- The number of persons employed part time for economic reasons, at 3.7 million, changed little in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
- The number of persons not in the labor force who currently want a job was 5.5 million in May, little different from the prior month. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
- Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force was little changed at 1.5 million in May. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was little changed over the month at 422,000.
Looking at a breakdown in the actual payrolls added by the increasingly unrealiable Establishment survey, we find the following:
- In May, professional and business services added 64,000 jobs, following an increase of similar size in April. Employment growth continued in professional, scientific, and technical services, which added 43,000 jobs in May.
- Government employment increased by 56,000 in May, compared with the average monthly gain of 42,000 over the prior 12 months. Employment in government is below its pre-pandemic February 2020 level by 209,000, or 0.9 percent.
- Health care added 52,000 jobs in May, similar to the average monthly gain of 50,000 over the prior 12 months. In May, job growth occurred in ambulatory health care services (+24,000), hospitals (+20,000), and nursing and residential care facilities (+9,000).
- Employment in leisure and hospitality continued to trend up in May (+48,000), largely in food services and drinking places (+33,000). Leisure and hospitality had added an average of 77,000 jobs per month over the prior 12 months. Employment in this industry remains below its February 2020 level by 349,000, or 2.1 percent.
- In May, construction added 25,000 jobs, including 11,000 jobs in heavy and civil engineering construction. Over the prior 12 months, construction had added an average of 17,000 jobs per month.
- Employment in transportation and warehousing increased by 24,000 in May. Transit and ground passenger transportation added 12,000 jobs, offsetting a decrease in the prior month. In May, employment also increased in couriers and messengers (+8,000) and air transportation (+3,000). Employment in transportation and warehousing has shown no clear trend in recent months.
- In May, employment in social assistance rose by 22,000, in line with the average monthly gain of 23,000 over the prior 12 months. Over the month, individual and family services added 17,000 jobs.
- Employment was little changed over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; information; financial activities; and other services.