Slowdown Expected in May Employment Data
Jeremy Glaser: For Morningstar I'm Jeremy Glaser. Ahead of May's employment report I'm here with Bob Johnson, our director of economic analysis, for a preview.
Bob, thanks for joining me.
Bob Johnson: Great to be here today.
Glaser: So on Friday what are you expecting in terms jobs added? We had 211,000 the month before, do you think we can reach that level again?
Johnson: You know, I don't think so. I think my top estimate would probably be 175,000 jobs to be added in May, in a range of 150,000 to 175,000 jobs. A little bit of a slow down, but the 175,000 frankly is just kind of assuming the big change that we had in food service and accommodation workers and amusement park workers, the big jump that we had last month, it just doesn't happen again. That's how you get to 175,000. Now if you have deterioration or aversion to some of the trends, the number could even be a little weaker than that. For example retail is a category that had been negative for a couple months in a row and then bounced back in April. I've assumed that the bounce back continues in May, but that very well may not be the case.
Glaser: The risk is to the downside then?
Johnson: That's what I would say, 150,000 to 175,000.
Glaser: Retail would be a sector you're watching closely. What else should be on radars on Friday morning?
Johnson: Yeah, I think I would keep a look on some of the goods side of the house, I think we'll maybe do a little better there. We've seen some pickup and some of the manufacturing data, so we're a little hopeful that manufacturing maybe adds 10,000 jobs, that mining continues to add jobs--it's been on a little bit of a run here. Hoping for another 10,000 to 15,000 jobs there. Probably my biggest assumption is construction bounces a little bit. We had you know, two unbelievable numbers and then we had two mediocre numbers, and now I think it's time for kind of a normal number. I'm looking for about 20,000 jobs in construction. Those are really the big things that I'm looking at.
Healthcare is my other area of concern. I'm estimating trend line growth of about 35,000 monthly jobs. I worry a little bit that we've seen some deterioration in healthcare spending, and I worry that translates into a few less jobs. I also worry about healthcare over the big Medicaid push is kind of over right now. I'm afraid that may cause a little slowing of that employment data. But basically assumes status quo in my estimate.
Glaser: What about wages?
Johnson: Wages will be a very interesting question. The consensus is that hourly wage growth will probably be down in May for a variety of reasons, including comparisons to a year ago would be difficult. But I'm thinking that maybe the numbers will look a little bit stronger if the sectors that I think are going to be weak--food service, amusement park workers, and then you've got your manufacturers and construction may be a little bit stronger--I'm thinking that maybe the wage number, everybody's thinking, well it's going to calm down a little bit. I think it may go the other way in May.
Glaser: Well Bob, thanks for the preview, and we'll talk to you on Friday when we have the numbers.
Johnson: Thank you.
Glaser: From Morningstar, I'm Jeremy Glaser. Thanks for watching.