Highlights
Job growth sputtered badly in May and suggests, together with other reports over the last several weeks, that the economy may be in a double-dip soft spot.

Nonfarm payroll growth rose only 78,000 in the month, well off expectations for a total near 200,000, and compared to an unrevised rise of 274,000 in April. May's gain is the smallest in nearly two years. Note that March was revised downward, more bad news, by 24,000 to a gain of 122,000.

Payroll growth is averaging 176,000 so far this quarter compared with 182,000 in the first quarter. The slowing is a disappointment, and, given widening signs of bumps ahead, there would appear little chance that growth will pick up steam in June.

The Bureau of Labor Statistics said softness in May was centered in construction, leisure, and movie production. The bureau also noted that seasonality is a big factor during the month, which as a further note was unusually cold.

Manufacturing continued its woeful slump, losing 7,000 jobs in the month. The outlook for the sector is growing a bit grim. Three manufacturing surveys -- ISM, Philly Fed, Empire State -- are veering downward. Company news out of the sector appears the weakest since the manufacturing recovery, which never amounted to too many domestic jobs, took off in mid-2003. Note that the manufacturing job loss combined with a 0.2% decline in manufacturing hours point to another weak month for industrial production data.

Among other categories, temporary help, perhaps offering an indication of overall future conditions, once again showed little life, falling 4,000.

Average hourly earnings rose 0.2% in the month with the year-on-year gain a manageable 2.6%. The average workweek, which posted a gain last month, was unchanged at 33.8 hours. Given the decline in job growth this month, these results are not likely to raise inflation concerns at the Federal Reserve.

But the household survey is telling a different story. The labor force based on this data rose a sharp 360,000 in the month, perhaps a sign that discouraged workers are giving it another try. Even better, employment rose even more sharply, up 376,000.

That combined with a downtick in those unemployed produces an unemployment rate of 5.1% in the month. This is the lowest rate since September 2001. But note that the unrounded rate is less dramatic, at 5.128% vs. 5.151% in April.

Another positive out of the household survey was a rise in the employment-to-population ratio, up one tenth to 62.7%. The ratio measures employment as a percentage of the whole population, not against the size of the population's workforce, changes in which are often hard to interpret. The ratio has been moving higher but still remains soft.

Bonds rallied and the dollar dipped in initial reaction to the data. But the split between the establishment survey and the household survey is likely to limit gains in bonds and losses in the dollar. The results are mixed for stocks, which will benefit from the dip in interest rates but will be hurt by indications of job weakness.

2005 Release Schedule

Released On: 1/7 2/4 3/4 4/1 5/6 6/3 7/8 8/5 9/2 10/7 11/4 12/2 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov