Worried About the Latest Jobs Report? You Should Be

The latest employment numbers have already caused plenty of consternation. But they are actually worse than you may realize.

Most attention focuses just on the headline number, which says that only 18,000 new jobs were created last month. But the employment report actually contains many indicators, which rarely line up perfectly. The problem is that this time they do. There are three independent samples to consider:

– The main establishment survey: This says that growth in employment has stalled. Moreover, wages fell slightly, and the workweek is falling. All indicators in this survey point to bad news. Hence this morning’s headlines.

– The revisions: Some firms are late to send in their employment numbers each month. They’ve finally sent them in for May, which was an ugly jobs report to begin with. But the revision is downright hideous. Instead of growth of +54,000 in May, the BLS is now reporting growth of +25,000 jobs. Employment growth in April was also revised down.

– The household survey: Which tells an even worse story, with employment falling 445,000 last month. These data are noisier, to be sure, but they are still informative, and they suggest that the true employment picture may be worse still. And there’s more bad news: The ranks of the long-term unemployed are rising, as are the ranks of the under-employed.

Bottom line: If the headline numbers have you worried, you aren’t worried enough. Each of the three separate data collections gives a consistent picture of a very grim labor market. This payrolls report will (and should) have a bigger impact than usual, because it tells a much clearer picture than usual.