Total nonfarm payrolls increased by 272,000 in the month of May, but decelerated y/y to 1.77%. Underneath the headline number, there a few developing trend changes worth highlighting:
- Key goods-producing industries are no longer making new cycle lows on a y/y basis.
- Government payrolls have not been making new cycle highs on a y/y basis.
- None of the key industries we track made new cycle lows y/y on a rate of change basis.
Source: Macrobond.
At the same time, JOLTS job openings decelerated by 19% y/y to 8.059 million in April, its lowest level since February 2021. Additionally, Indeed job postings through June 7th were negative y/y in 43 of 47 industries reported. However, there was a rate of change acceleration in more than half of those industries, which could make its way into the lagged JOLTS data.
Source: Macrobond.
Turning to layoffs, initial claims data continues to remain relatively low, coming in at 229,000 last week. On a y/y basis, initial claims are down 10%. Continuing claims, those who have been laid off and remain unemployed, also remain low at 1.792 million.
Source: Macrobond.
While payrolls have improved modestly and job openings have declined, initial claims remain relatively low. This dynamic mostly reflects a similar environment to what we have seen over the last year –cautious hiring and cautious layoffs. We will continue to monitor the labor market for insight into broader consumer setup, which has significant implications for real economic activity.
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Investment Strategist
Boyd Watterson Asset Management, LLC