The jobs report due out tomorrow marks the first major measure of the economy for the month of May. But beware: The Bureau of Labor report has a lot of noise from temporary hiring for the national census so it will mask underlying weakness in the jobs market. Economists are estimating that the economy added 540,000 jobs last month — the biggest gain in 27 years — but 415,000 are Census workers. Calculated Risk estimates about half of those workers will be leaving their jobs this month (see chart below).
To get a better measure of the core economy, “ex” out the Census Bureau hires, which would leave a skinnier gain of 125,000 workers in the nonfarm payroll category. In April, the economy added 290,000 nonfarm payroll workers, but that number drops to 224,000 without the census takers.
The expected slowdown in permanent hires in May is pretty much a mirror of all the other data that has been emerging in recent weeks, especially from jobless claims, which, after falling sharply late last year, have stalled out in recent months. Similarly, data from ADP, which does not include any government workers, reveals that hiring is far from what one would expect when emerging from a deep recession. If the economists are correct about the pace of May hiring, it will take about 7 years to recoup all the job losses of the Great Recession.
The analysts of Hedgeye have put together a graphic that shows just the job loss devastation: We are at record levels for anyone unemployed more than 27 weeks. Congress has extended unemployment benefits to an unprecedented 99 weeks (although it hasn’t appropriated the money to pay everyone — another story for another time.) Get an eyeful at the bottom of this post. (Click on the graphics to enlarge.)
Census worker chart via Calculated Risk
Long-term unemployed chart via Hedgeye