Summary
Earlier this morning, the Labor Department released May employment data. The report indicated that the unemployment rate dipped 0.1%, to 4.6%. Meanwhile, payroll jobs grew by a reported 75,000 during the month, far below expectations.
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* Today's release from the Labor Department indicated that the unemployment rate fell 0.1% during May, to 4.6%. The report also showed an increase of 75,000 payroll jobs during the month.
* The consensus forecast was looking for the unemployment rate to remain unchanged at 4.7%, versus the small decline actually reported. However, the forecast for the increase in payroll jobs came in around 170,000, substantially above the actual 75,000 gain that was reported. Moreover, revisions to prior months' data resulted in a net downward revision of 37,000 jobs.
* The two components comprising each month's employment report are the household survey and the establishment survey (the latter also known as the "payroll survey.") The unemployment rate is derived from the former, making it a visible, highly sensitive number for political purposes. (Listen to Rush Limbaugh and Sean Hannity today, and you will hear what I mean.)
* The payroll survey represents the number generally more important to the immediate behavior of the financial markets, although it also possesses a good deal of political importance. Today's report showed job growth of 75,000 during May. This compared with a gain of 106,000 in payroll employment during May of last year.
* This morning's report contained net revisions that subtracted 37,000 from March and April job creation. March went to +175,000 from +200,000, while April went to +126,000 from +138,000. Thus, including revisions, payroll employment over the last three months grew by 376,000 jobs, versus the 413,000 gain before the March and April adjustments. (During the same three-month period in 2005, payroll employment rose by 474,000.)
The following table breaks out the reported growth in payroll employment over the trailing three months, versus the same period in each of the prior five years.
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TRAILING THREE-MONTH PAYROLL EMPLOY-
MENT GROWTH (Thousands of Workers)
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Month 2006 2005 2004 2003 2002 2001
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May 75 106 267 -18 -6 -32
Apr. 126 228 252 -68 -105 -295
Mar. 175 140 346 -199 -45 -47
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Total 376 474 865 -285 -156 -374
=== === === === === ===
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* For the 12 months ended May 2006, payroll employment expanded by a reported 1.896 million jobs. This compared with an increase of 1.870 million during the 12-month period ended May 2005. Over the six-month periods ended May 2006 and 2005, reported growth was 0.875 million and 0.975 million, respectively.
* According to this morning's report, average hourly earnings registered a very modest one-cent gain during May, representing growth of less than 0.1%, to $16.62. This compared with April's $16.61, which was unrevised from last month's report, and with March's $16.51, which was originally reported as $16.52.
* Year over year, average hourly earnings were up 3.7% as of May. This compared with a Consumer Price Index that rose 3.4% for the 12 months ended April (the latest CPI data currently available).
* During the 12 months ended April, the year-over-year gain in the CPI exceeded the year-over-year growth in average hourly earnings in all but three of those months (March and April 2006, and June 2005). In these three instances, the wage-growth premium above the CPI was very modest, and the overall pattern clearly exhibits the longer-run loss of real purchasing power based on these particular series. And this is against a CPI that we (and the vast majority of others, too) believe is significantly understated.
* The table below contains the latest available results for key employment and inflation series. (NOTE: The new material contained in these tables will be posted to the "Data & Charts" section on the GRA website.)
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KEY U.S. EMPLOYMENT AND INFLATION DATA
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PAYROLL
UNEMPLOYMENT EMPLOYMENT AVERAGE HOURLY
RATE CHANGE EARNINGS
(%) (000s) ($s)
--------------- ---------- -----------------
Month Yr. Yr. Yr. Year/
/Year No. Ago No. Ago No. Ago Year
--------------- ---------- ------------------
05/06 4.6 5.1 75 106 16.62 16.03 3.7%
04/06 4.7 5.1 126 228 16.61 16.00 3.8%
03/06 4.7 5.1 175 140 16.51 15.95 3.5%
02/06 4.8 5.4 200 265 16.47 15.91 3.5%
01/06 4.7 5.2 154 76 16.40 15.88 3.3%
=================================================
12/05 4.9 5.4 145 160 16.35 15.84 3.2%
11/05 5.0 5.4 354 133 16.28 15.81 3.0%
10/05 4.9 5.4 37 338 16.28 15.79 3.1%
09/05 5.1 5.4 48 177 16.19 15.77 2.7%
08/05 4.9 5.4 175 131 16.16 15.74 2.7%
07/05 5.0 5.5 241 38 16.14 15.68 2.9%
06/05 5.0 5.6 166 78 16.07 15.65 2.7%
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EMPLOY. COST INDEX (%)* PRODUCTIVITY (%)#
----------------------- ------------------------
Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Yr.
----------------------- ------------------------
2006 0.6 <-----------> 3.7 <---------------->
2005 0.9 0.7 0.8 0.8 3.8 2.4 4.2 -0.3 2.7
2004 1.1 1.0 0.9 0.7 2.4 4.5 1.7 2.0 3.4
2003 1.3 0.9 1.0 0.7 3.8 6.3 9.8 0.5 3.9
2002 0.8 1.0 0.7 0.7 6.8 0.9 4.0 0.1 4.1
2001 1.1 1.0 1.1 0.9 -0.6 5.6 1.7 6.2 2.4
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2000 -1.8 7.4 -1.0 3.9 2.8
1999 3.6 0.7 2.7 7.1 2.8
1998 3.1 1.2 4.4 2.1 2.7
1997 -1.3 4.8 3.5 1.6 1.6
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CONSUMER PRICE INDEX## PRODUCER PRICE INDEX@
-------------------------- ---------------------
Month Yr. Year/ Yr. Year/
/Year Index Ago Year Index Ago Year
-------------------------- --------------------
04/06 201.0 194.1 3.6% 160.5 154.4 4.0%
03/06 199.8 193.2 3.4% 159.0 153.6 3.5%
02/06 199.1 192.1 3.6% 158.2 152.4 3.8%
01/06 199.0 191.4 4.0% 160.4 151.7 5.7%
================================================
12/05 197.7 191.2 3.4% 160.0 151.5 5.6%
11/05 197.8 191.2 3.5% 158.8 152.2 4.3%
10/05 199.1 190.8 4.4% 159.6 150.8 5.8%
09/05 198.6 189.7 4.7% 158.4 148.6 6.6%
08/05 196.2 189.4 3.6% 156.2 148.5 5.2%
07/05 195.1 189.2 3.1% 155.4 148.4 4.7%
06/05 193.9 189.2 2.5% 154.2 148.5 3.8%
05/05 194.0 188.6 2.9% 154.1 148.6 3.7%
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NOTE: All data are seasonally adjusted. *Total
civilian compensation, 3-month change. #Nonfarm
business output per hour, annual rates. ##All
urban, all items. @Finished goods.
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