New Home Sales Fall Again in May

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales FELL 7.8 percent in May to a seasonally adjusted annual rate (SAAR) of 626,000;
  • The April sales pace originally reported as 673,000 was revised up to 679,000
  • The unsold inventory of new homes EDGED UP 1,000 or 0.3 percent in May to 333,000;
  • With the slower sales rate, the months’ supply of new homes for sale ROSE to 6.4 in May from 5.9 in April;
  • Median price of a new home TUMBLED $27,100, or 8.1 percent, from April to $308,000.

Trends:

  • The number of contracts for the sale of new homes fell month-month for the second month in a row for the first time since last summer;
  • The month-month percentage decline in the median price of a new home in May matched the increase in the median price in April;
  • In its separate report on new home completions, the Census Bureau, said last week builders had finished 890,000 single-family homes – 264,000 more than sales.

Data Source: Census Bureau and Department of Housing and Urban Development

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Builder confidence slipped a bit in early June and the Census Bureau and Department of Housing and Urban Development offered an explanation as new home sales fell for the second straight month. Even as the median price of a new home in May gave back the 8.1 percent price increase in April, the lower prices did not draw buyers back into the market.

The median price of a new home fell month-month for the third time this year: the average price drop, $20,700, exceeding the average gain in the other two months, $20,500.

Not only did new home sales drop month-month in May, but they fell year-year for the first time since December, another sign the housing market is teetering.

The Census-HUD report tracks contracts for sale not closings. The National Association of Relators’ parallel report on pending home sales is due next week.

New home sales fell most sharply in the West dropping from an SAAR of 195,000 in April to 125,000 in May.

The Census-HUD report followed the report from the National Association of Home Builders showing builder confidence fell in early June to a still solid 62 from 64; the NAHB’s buyer traffic report, measuring potential buyers kicking tire at model homes, remains below 50 which is the tipping point between a positive and negative outlook. The buyer traffic measure has been below 50 for eight straight months.

The dour sales report comes at the beginning of a traditional home buying season when prospective homeowners try to settle in a new home between the end and the beginning of the school year.

Meanwhile, the number of residential construction jobs, according to the Bureau of Labor Statistics, rose about 5,000 from April to May to 2,901,000.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Case Shiller Home Prices Index Increases at Fastest Pace in a Year

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic indices ROSE in April with the strongest gains in a year;
  • The 10- and 20-year indices also ROSE year-year but at more slowly than in March;
  • The price index ROSE in all 20 cities surveyed in April compared with March when 19 cities showed month-month increases;
  • The April increases were slower than March in six cities;
  • Year-year the price index ROSE in April in all 20 cities surveyed but the year-year increase was slower in 8 of the 20 cities than nit had been in March

Trends:

  • The price index rose in all four census regions led by 1.1 percent increases in the Northeast and Midwest;
  • The price index rose for the 16th straight month in Miami but fell for the third straight month in New York;

Data Source: S&P Case Shiller/Core Logic

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Home values rose for the second straight month in April, according to the Case Shiller Core-Logic Home Price Index but the year-year growth in values continued to slow.

The month-month price gains in April were the strongest since April 2018 which could bring potential sellers back into the market while putting another obstacle in the path of buyers. But the price increases come as mortgage rates have been dropping. Realtors have been citing weak inventories as a reason for slow sales of existing single-family homes, a condition which may be resolved with the price increases.

Indeed, it may be the higher prices which draw buyers back into the market, hoping to secure deals before prices go up further. The Case Shiller survey covered the same month in which the National Association of Realtors reported the median price of an existing single-family home rose 2.8 percent. Existing home sales represent about 90 percent of all home sales.

Month-month price increases were led in April by Boston where prices rose 1.9 percent followed by Detroit and San Francisco (1.6 percent), Chicago (1.2 percent), Portland and Seattle (1.1 percent)  and Atlanta, Charlotte and Los Angeles (1.0 percent).

Year-year price increases were led by Las Vegas (7.1 percent), Phoenix (6.0 percent) and Seattle (5.6 percent).

Prices rose 1.1 percent in the Midwest, 1.0 percent in the West, 0/9 percent in the Northeast and 0.7 percent in the South.

Hear Mark Lieberman this Friday on P.O.T.U.S. radio’s Morning Briefing, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Existing Home Sales Bounce Back in May

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – ROSE 2.5 percent, 130,000, in May to a seasonally adjusted annual sales rate of 5.34 million;
  • Median price of an existing single-family home ROSE 4.0 percent, $10,800, to $277,700;
  • Year-year the median price is up 4.8 percent or $12,600;
  • Number of homes available for sale ROSE 90,000 or 4.9 percent to 1.92 million;
  • The months’ supply of homes for sale in May EDGED UP 0.1 months to 4.3 months.

Trends:

  • The May increase in closings was only the third monthly gain in the last 14 months; the April sales pace was revised up 20,000 to 5.21 million, matching March;
  • The May sales pace is the strongest since last July (5.34 million);
  • Year-year sales were DOWN 1.3 percent, the 15th consecutive month in which year-year sales have dropped;
  • The median price of an existing single-family home ROSE for the fourth straight month;
  • The month-month increase in homes for sale marked the fifth straight monthly increase in inventory.

Data Source: National Association of Realtors (NAR)

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Realtors breathed a collective sigh in May as the pace of closings on existing single-family homes improved, tracking the boost in pending home sales two months ago. But, with pending hoe sales (contracts) having fallen in April, the increase in sales could prove to be temporary.

Sill the positive word for the housing market could prove to be good news not only for realtors but for furniture and appliance retailers.

And, despite the slowdown in the pace of sales contracts, the 4.8 percent boost in the median price of an existing home helped bring more homes onto the market. Realtors had been complaining about the paucity of inventory, citing it as one of the reasons for weak sales. While buyers may “settle” in the purchase of other items, a home may be too big of an investment.

After falling for six straight months from July through December last year, the number of homes on the market has increased each month this year. Year over year, the number of homes for sale has increased for 10 straight months.

The boost in inventory – if it translates into sales – could flip other housing statistics which show that while the homeownership rate for older Americans – 65-plus – fell only slightly in the first quarter, (to 78.5 percent in 1Q 2019 from 78.8 percent in 4Q 2018), the homeownership rate for younger Americans — under 35 – dropped 1.1 percentage points to 35.4 percent, the lowest in a year.

Home buyers have taken advantage of lower mortgage rates. The average rate for a 30-year fixed rate loan has fallen from 4.94 percent last November to 3.82 percent last week. That change reduces the monthly payment on a 30-year $300,000 loan by almost $198 per month.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

1st-time Unemployment Insurance Claims Drop

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 216,000 1st-time claims for unemployment insurance for the week ended June 15, DOWN 6,000from the previous week’s unrevised 216,000;
  • The four-week moving average of initial claims ROSE 1,000 to 218,750;
  • Four week moving average represented 0.145 percent of employment, UP from 0.144 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,662,000 for the week ended June 8, DOWN 37,000 from the previous week’s UPWARDLY REVISED 1,699,000; (from 1,695,000)
  • The four-week moving average of continued claims ROSE 5,250 to 1,679,000.

Trends:

  • Initial claims for unemployment insurance declined for the first time in five weeks (May 11, down 16,000 to 212,000);
  • Four-week moving average of 1st-time claims rose for the second week in a row;
  • Continued claims fell after rising for two weeks in a row.

Data Source: Department of Labor

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Despite a dip in first time claims for unemployment insurance, the preliminary report from the Labor Department hints the 49-year low unemployment rate could be in jeopardy when the Bureau of Labor Statistics releases its June Employment Situation report on July 5.

Comparing new unemployment insurance claims from mid-month in May to mid-June (the “reference week” used by the BLS, claims rose slightly which suggests a boost in unemployment thus threatening the 3.6 percent unemployment rate.

(To be sure, the unemployment claims numbers are subject to revision and won’t be finalized until next week.)

Initial claims rose from mid-April to mid-May, with a corresponding increase in the unemployment rate (carried to two decimal places) from 3.58 percent to 3.62 percent, each of which rounded to the headlined 3.6 percent rate. 

The data for the other half of the claims report – continued claims which is a rough surrogate for hiring –is published on a one-week lag. Prior to the last BLS report, which showed a disappointing 75,000 new jobs in May, continued claims increased 8,000 from mid-month to mid-month, presaging the slower job creation.

You can hear Mark Lieberman every Friday at 6:20 am (EDT) am on the Morning Briefing on P.O.T.U.S. radio, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

FOMC Holds Fed Funds Rate at 2.25 to 2.50 percent

By Mark Lieberman

Managing Director and Senior Economist

Highlight:

  • FOMC leaves target Fed Fund rate unchanged at 2.25-2,50 percent

Trend:

  • The target Fed Funds rate was set at the current level last December;
  • The rate was set at 1.50 – toe 1.75 percent in March 2018.
  • After holding rates at near zero from December 2008 through December 15, the FOMC has raised the target rate nine times.

Source: Federal Open Market Committee

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The Federal Open Market Committee made no change in interest rates Wednesday at the conclusion of its two-day meeting. The target for the rate banks charge each other for overnight borrowing remained at 2.25 – 2.5 percent.

The FOMC voted 9-1 with St. Louis Fed President James Bullard casting the lone dissenting vote. Bullard, according to the end-of-meeting statement issued by the committee, “preferred…to lower the target range for the federal funds rate by 25 basis points.”

The FOMC and its chair, Jerome Powell, has been under pressure from President Trump to lower rates to stimulate the economy. That pressure increased after the Bureau of Labor Statistics reported earlier this month the economy added a disappointing 75,000 jobs in May, far below its recent three-month average of twice that. Negative revisions for the March and April job counts subtracted a combined 75,000 jobs from the gains recently reported for those months, so the May net job gains were zero.

Nonetheless, the FOMC said “job gains have been solid, on average, in recent months” and noted “on a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent.” The FOMC has been trying to maintain inflation at two percent.

The FOMC action means no change in the prime interest rate which is used as the basis for home equity lines of credit and auto loans.

In their quarterly economic projections, the Fed forecast slower growth for the economy overall predicting GDP growth would be 2.1 percent this year falling to 2.0 percent next year and 1.8 percent in 2021. The forecast was virtually unchanged from the projections offered three months ago.

At the same time, the forecast anticipated a slight increase in the unemployment rate from the current 3.6 percent to 3.8 percent by 202, slightly more optimistic than the forecasts issued in March.

The next scheduled FOMC meeting is set for July 30-31.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Construction Activity Drops in May; Multi-Family Gains Stem Deeper Decline

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing permits and starts SLIPPED in May, as starts dropped and permits were essentially flat;
  • The seasonally adjusted annual rate of permits EDGED UP 0.3 percent to a seasonally adjusted annual rate (SAAR) of 1.294 million;  
  • The SAAR of starts FELL 0.9 percent with the decline concentrated in single-family starts which dropped 6.4 percent; multi-family starts ROSE 10.9 percent;
  • Data for March and April were revised to show a drop in the originally reported number of permits but an increase in starts; most of the increase in starts came in multi-family.
  • The rate of total housing completions FELL 9.5 percent. The SAAR of single-family completions DROPPED 5.0 percent and the pace of multi-family completions FELL almost 20 percent.

Trends:

  • Single-family permit activity rose for the first time since last November. The five straight months of decline of single-family permits was the longest streak of declines since April-September 2010;
  • Year-year, the rate of single-family permits has been down for eight straight months;
  • Single-family starts are down year-year for four straight months and seven of the last eight months;
  • Single-family starts represented 64.6 percent of total starts, the lowest share since December 2016 (63.7 percent);
  • The rate of multi-family starts improved for the fourth straight months, the longest stretch since July-October 2004.

Data Source: Census Bureau and Department of Housing and Urban Development

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Housing sector weakness continued in May as construction activity, measured by housing starts, declined ad permits increased but barely.

The Census and Housing and Urban Development data came just one day after the National Association of Home Builders (NAHB) reported its Housing Market Index dipped slightly though it remained in positive territory at 64 (out of 100). Builders in the survey cited weakness in the current market for new home sales along with sales six month out and that buyer traffic into model homes had declined.

The most recent Census-HUD report on new home sales, for April, showed a 6.9 percent decline in the SAAR of sales. Census-HUD will report ion new home sales for May next Tuesday.

The decline in building activity reflected less interest in home buying, despite lower mortgage rates, and greater rental activity. Governments have taken notice. Last week the New York State Legislatures passed, and Governor Andrew Cuomo signed legislation increasing protections for tenants even as developers warned the new law would mean a cutback in construction of affordable housing units in New York.

The shift in attitudes of the “American dream” of homeownership has its roots in the Great Recession and mortgage crisis of 10 years ago during which current would-be homeowners watched their parents or friends’ parents were subject to increasing levels of foreclosure. At the same time, those potential home-buyers themselves were affected by higher levels of student debt affecting credit ratings.

Regionally, the report on permits and starts mirrored the HMI which showed builder confidence falling in the Northeast and West coast. Housing starts dropped in those two regions, according to the Census-HUD report with sharp declines in single-family home starts.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Builder Confidence Slips in June

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index FELL two points in June to a still solid 64 (out of 100);
  • All three index components DECLINED led by the outlook for Future home sales and buyer traffic, each of which fell two points;
  • Current home sales fell by one point;
  • By region, builder confidence FELL on the coats, down five points in the Northeast and four points in the West.

Trends:

  • The overall Index dropped for the first time this year;
  • The last time the headline index fell was in December when it dropped four points to 56, its lowest level since May 2015 (54);
  • The last time all three index components declined was also in December 2018;
  • Three of the four regional indices were over 60 and the fourth (Midwest) just missed at 59; the last time all four regions were at 60 or above was last October.

Data Source: National Association of Home Builders

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Builder sentiment caught up with reality in June with the National Association of Home Builders’ Housing Market Index slipping two points while remaining at a solid 64 (out of 100).

The index, which measures the current new home sale market as well as conditions six month forward along with buyer traffic, had been rising consistently even as residential construction data (housing permits and starts) and new home sales have been struggling.

And, jobs data for the construction sector has been mixed. According to the Bureau of Labor Statistics, the number of residential construction jobs has not increased for two consecutive months since last October-November.

Residential construction has been battered by new tax laws which reduced the tax advantage of homeownership as well as higher material prices resulting from higher tariffs imposed by the Trump Administration. About the only thing that’s gone right for builders has been the mortgage market where the average rate for the most popular 30-year fixed rate loan has fallen from 4.94 percent last November to 3.82 percent last week. That change reduces the monthly payment on a 30-year $300,000 loans by almost $198 per month.

But instead of any sharp increase in permits or starts for single-family homes, builders have seen permits for single family homes fall almost 5 percent in the last three months while single-family home starts are off more than 10 percent. Permits for multi-family housing are up about 4 percent in the same period and multi-family starts have jumped about 16 percent in the same timeframe.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

1st-time Unemployment Insurance Claims Edge Up

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 222,000 1st-time claims for unemployment insurance for the week ended June 8, UP 3,000from the previous week’s upwardly revised 219,000 (from 218,000);
  • The four-week moving average of initial claims ROSE 2,500 to 217,750;
  • Four week moving average represented 0.144 percent of employment, UP from 0.142 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,695,000 for the week ended June 1, UP 2,000 from the previous week’s UPWARDLY REVISED 1,693,000; (from 1,682,000)
  • The four-week moving average of continued claims ROSE 7,750 to 1,683,250.

Trends:

  • Initial claims for unemployment insurance have increased for three straight weeks for the first time this year;
  • Four-week moving average of 1st-time claims rose after three straight weekly declines;
  • Continued claims rose for the second week in a row and fifth time in the last seven weeks

Data Source: Department of Labor https://oui.doleta.gov/press/2019/0613

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Something’s going on in the labor market.

While the number of first time claims for unemployment insurance remains low in historic terms, the increase in layoffs resulting in claims hint that employers are getting skittish. The nervousness was apparent in the Employment Situation report for May which showed a meager gain of 75,000 jobs (netting to zero when considered against the downward revisions for jobs growth in March and April).

While the Job Openings and Labor Turnover Survey (JOLTS) earlier this week showed a record level of hiring in April, it also showed total job separations for this year on pace to exceed 2018.

The slowdown in job growth adds to the growing sentiment that the 10-year expansion may have run its course (a polite way of avoiding the word “recession”).  The broad-based nature of the downward trend in job growth only adds to the concerns which will heighten interest in next week’s meeting of the Federal Open Market Committee. Beyond the interest-rate decision by the FOMC, next week’s meeting will be accompanied by the Fed’s quarterly economic projections. With its recent increases in rates, the FOMC has given itself some room to reduce the fed funds rate in an effort to avoid a slowdown.

The overall downward slope in hiring could be serious enough to warrant a rate cut as evidence of further weakening in an economy battered by a soaring federal deficit and the likelihood of higher consumer prices due to the Trump Administration’s ongoing trade wars.

Exacerbating the weak labor market data is its timing. The first quarter is usually a time of volatility in employment and unemployment as businesses – particularly retail – unwind year-end staffing increases. Each year since the Great Recession, at least one month in the first quarter has seen unusually small or large job growth. In February this year, for example, the Bureau of Labor Statistics reported growth of just 56,000 jobs after a gain of 312,000 jobs in January compared with three-month average job growth of 233,000 in the fourth quarter last year,

Similarly, in 2018, February showed a gain of 330,000 jobs (compared with a three-month average of 188,000). In 2017, BLS reported growth of 252,000 jobs in January, up from the three-month average of 171,000.

By contrast, apart from storm-related slowdowns, monthly job growth for the other three quarters has been in a much narrower range.

Weakening labor data isn’t the only directional arrow towards a possible broader slowdown. Gross Domestic Product growth – though 3.1 percent in the first quarter this year – has hovered just over or just under 2.0 percent for four of the nine quarters of the Trump presidency.

Combined, the two indicators suggest the FOMC might be compelled to step in.

You can hear Mark Lieberman every Friday at 6:20 am (EDT) am on the Morning Briefing on P.O.T.U.S. radio, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Hiring hits Record in April

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Hiring in April ROSE to a record high 5.94 million, an increase of 4.2 percent over March;
  • Job Openings at the end of April SKIDDED 0.3 percent (25,000) to 7.45 million;
  • The ratio of job openings per unemployed ROSE to 1.28 in April from 1.20 in March.

Trends:

  • Job openings exceeded unemployed for the 14th month in a row;
  • The month-month percentage increase in hires was the largest since February 2016 (5.4 percent);
  • The ratio of “quits” to layoffs and discharges remained at 2:1 signaling continued confidence in the labor market.

Data Source: Bureau of Labor Statistics

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In all of 2018, the number of job openings declined month-month only three times yet with only four months of data in 2019, we’ve already seen two dips.

Time to push a panic button? Probably not, but there are some warning signs tucked away in the Job Openings and Labor Turnover Survey (JOLTS) for April, the same month in which the Bureau of Labor Statistics reported payroll jobs grew 263,000, later revised down to 224,000.

In addition to the two month-month declines in job openings (February 483,000 or 6.3 percent) and April 25,000 (0.3 percent) only the manufacturing sector showed an increase in the number of unemployed per job opening, suggesting the skills mismatch between job-seekers and openings continues.

That openings are declining could suggest an increase to the ongoing, record length expansion. That should increase pressure of the Federal Open Market Committee to at least consider cutting interest rates when it meets later this month. In strict economic terms though that could exacerbate the tight job market bring the cost of capital down while increasing the cost of labor.

The strongest part of the JOLTS report was the month-month increase in the number of “quits” as the number of layoffs/discharges declined month-month. Year-to-date, the number of layoffs for the first four months of 2019 is almost 3 percent below 2018.

According to the April JOLTS report, the economy is on a pace for 69.5 million hires in 2019, up slightly from 68.9 million in 2018.

You can hear Mark Lieberman on P.O.T.U.S Morning Briefing (Sirius 124) every Friday at 6:20 am Eastern Time. Follow him on Twitter at @foxeconomics.

Economy Adds Disappointing 75K jobs in May; Unemployment Rate Holds at 3.6%

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 75,000 in April
  • Unemployment rate in May REMAINED at 3.6 percent;
  • Average weekly earnings INCREASED $2.06 in May to $957.35, a 2.8 percent year-year gain;
  • Average hourly earnings GREW 06¢, in May to $27.83 a 3.1 percent annual increase
  • Private sector jobs INCREASED 90,000; Government payrolls FELL 15,000;
  • Prior month job totals were revised down, an aggregate 75,000 wiping out the May increase in jobs: the number of new jobs in April was revised from 263,000 to 224,000, down 39,000, the number of new jobs in March was revised down 36,000 to a gain of 153,000;
  • The number of persons unemployed ROSE 64,000 to 5.89 million while the number of persons employed INCREASED 113,000; The Labor Force therefore ROSE 176,000;
  • The number of persons not in the labor force DECLINED 8,000 to 96,215;
  • Labor force participation rate REMAINED at 62.8 percent, matching the rate one year ago;
  • By sector number of retail jobs FELL 7,600; the number of information sector jobs DROPPED 5,000;
  • The number of Professional and Business Service jobs ROSE 33,000 in May, down sharply from the 62,000-job growth in April; similarly, the number of education and health jobs GREW by 24,000 in May compared with 55,900 in April;
  • Governments shed 15,000 jobs led by a DROP of 10,000 jobs by state governments and a DECLINE of 9,000 local government jobs. The federal government ADDED 4,000 jobs.

Trends:

  • Payroll jobs were up for the 104th straight month
  • The year-year growth in average hourly earnings, while relatively strong at 3.1 percent, was below the average year-year growth of the last six months: 3.3 percent;
  • Month-month payroll job growth was the third weakest of the Trump Administration: jobs grew by 18,000 in September 2017 following devastating hurricanes and 56,000in February;
  • The number of persons working full-time FELL for the third straight month for the first time since October 2009 when the number of full-time workers declined for the 13th straight month.

Data Source: Bureau of Labor Statistics

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There were several disappointments in the May Employment Situation release: beyond the third weakest month-month job gain in the 28-month old Trump Administration, economists who had been hoping for some clue jobs numbers as to the impact of higher tariffs came away empty-handed.

The actual numbers – less than half the new jobs forecasters had anticipated – showed a weakening labor market even among the stronger industry sectors such as professional and business services which added 33,000 jobs in May down from 62,000 in April but the number of new jobs in the sector was revised down a combined 24,000 for March and April reducing the impact and significance of the May increase.

The jobsn report adds to the concerns of the Federal Reserve which has indicated it is weighing the impact of tariff increases and could use them as an excuse to cut interest rates to stimulate the economy through the Federal Open Market Committee. Some observers have suggested the FOMC’s recent rate increases were designed to give the policy-makers room to cut rates.

The May report showed the health care sector added a respectable 24,100 jobs, respectable until compared with the average monthly gain of 53,000 over the previous three months.

The reduction of 15,000 government jobs in May came after revisions to March and April numbers reduced the number of government jobs (at all levels) by 18,000.

While earnings growth appeared strong, they were buoyed artificially by weakness in the one of the two lowest paying sectors, retail and leisure-and-hospitality. The number of retail jobs fell 7,600 – the fourth straight month-month decline – while the number of leisure and hospitality jobs – which include low-paid restaurant workers – increased 26,000 (16,900 of which were restaurant jobs).

The number of re-entrants to the labor – who are counted as unemployed – fell 56,000after dropping 81,000 in April suggesting discouragement or frustration in efforts to land a job.

Meanwhile, the duration of unemployment rose for the fourth straight month, to 24.1 weeks, the highest since last September. In context, at the worst point of the Great Recession, the average duration of unemployment topped out at 40.7 weeks in July 2011.

The number of temp and part time jobs grew in May by almost 53,000 suggesting employer reluctance to make permanent full-time staff additions.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.