Last month we discussed the fact that officials had approved the latest Five Year Plan for China's economy. The ultimate goal of the plan is to overtake Germany, Japan, and the United States in terms of manufacturing sophistication by 2049, the 100th anniversary of the founding of the People's Republic of China.
Initial Reaction This report was a veritable disaster. Although the establishment survey sported 142,000 jobs it was much much weaker than expected. Downward revisions for the last two months totaled 59,000.The labor force fell by 350,000 driving the participation rate to a 40-year low. Government jobs rose 24,000 so private payrolls accounted for a mere 118,000 jobs. Weekly hours ticked down by 0.1 hours.Topping off the disastrous set of numbers, employment declined by 236,000. Consensus Estimates
Recession Numbers Second Consecutive Month
Yesterday I was asked if the services ISM changed my view about the US being in recession. I responded that I wanted to see today's job report first.
Well I have seen it and the report is nothing short of a certified disaster.
Yes, Virginia, based on the household survey, and manufacturing reports, the regional Fed surveys the US is in recession.
Lost amidst the furor over the Affordable Care Act and its effect on jobs is a much more worrisome trend in the labor market: the labor force participation rate continues to decline. In a separate report released yesterday, the Congressional Budget Office (CBO) projected that the labor force participation rate would decline from 62.9% in the fourth quarter of 2013 to 60.8% by 2024.
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Simply put, job growth is not keeping pace with population growth–specifically, the growth of the labor force which is generally defined as the population between the ages of 18 and 64.
About that jobs report. Upon closer inspection, the report was a total disaster. You wouldn’t know this from the financial media’s coverage, but it was. The establishment survey shows a gain of 288,000 jobs last month. However, the household survey shows that that the economy lost 73,000 jobs in April.