U.S. Employment Report Not As Strong As People Think

I always find it fascinating how single minded financial markets, and financial journalists, are in their focus on only the number of jobs according to the payroll survey while ignoring other indicators who are at least as important.

Case in point is how the markets now rally in response to how the payroll job number was a few tens of thousands higher than expected ,which is to say a few 1/100 of a percentage points higher, while ignoring how average weekly pay fell by 0.4% (as the average work week fell by 0.6% while average hourly earnings rose 0.2%). This means that total income received by workers fell, yet the report is still treated as a sign of economic strength.

The household survey confirms the picture of more people working, but at fewer hours, as the number of full time unemployed continued to drop while the number of part time unemployed (people who have part time jobs and want to work more hours but can't find a full time job) increased both compared to the previous month and compared to April 2012.

There is no doubt that the U.S. economy is recovering, but this report confirms that the pace of recovery remains very slow.