Transcript Employment
Published by: Bureau of Labor Statistics (BLS) Frequency: Monthly Period Covered: prior month Market significance: very high › First complete look at economic activity. http://stats.bls.gov/news.release/pdf/em psit.pdf The most eagerly awaited news on the economy that has great economic and political significance. Tells us whether production, employment, orders, etc., are higher or lower than in the previous month. Provides a wealth of information about virtually every sector of the economy, which is used to formulate forecasts for many economic indicators. Gives basic employment statistics for nine major sectors of payroll employment. Allows us to discover how many hours people worked in each category and how much they were paid (average hourly earnings). Information About : Household Survey – Government conducted survey which calculates unemployment rate. Establishment Survey – Payroll Survey, in which companies are directly queried about recent changes in staffing. Market Impact › Bonds › Stocks › Dollar Employment news is very timely. It’s released only a week after the end of the month. Rich in detail about the job markets and household earnings. This information can help economic activity. We know nothing about the construction industry or services, which make up over one-half of our economy, until this report is released. Economists use this report as one method of estimating industrial production and change in personal income. Helps refine GNP forecasts for the quarter and assists in estimating almost every other economic indicator. Employment Hours Worked Hourly Earnings Industrial Production Personal Income Housing Starts GNP Household Survey Establishment Survey Labor Force Payroll Employment Household Employment Average Hourly Workweek Unemployment Rate Aggregate Hours Index Household Survey › Calculates labor force, household employment, and unemployment rate. › The government contacts 60,000 homes. 95% of the responses based on the information comes out of this survey, which shows who has a job and who does not. Unemployment Rate Number of People Unemployed Total Labor Force What Constitutes Unemployment? › You must be unemployed. › You have to be actively seeking employment. Establishment Survey (Payroll Survey) › Calculates payroll employment statistics, average workweek, overtime, average hourly earnings, and aggregate hours index. › More accurate than Household survey because businesses have nothing to lose for providing accurate information. Payroll Employment › Information gathered on the job market comes directly from business establishments, not household. › Very accurate because it contains latest changes in employment and income. Information shows how well the US economic machine is working. Bonds › A strong report reflects that the economy is already operating at or near peak capacity. We’ll see a drop in bond prices and an increase in interest rates. › A weak employment report reflects a more sluggish economy, which is bullish for bond prices and interest rates will lower. Stocks › As the number of people holding jobs increases, workweek increases and employees easily slip into the role of consumers and spend more money. › Little or no growth in employment is bad for stocks. Households will be less inclined to shop. Weak sales can shrink income and shares will be reduced. Dollar › A vigorous jobs report could drive interest rates up. › An anemic jobs report could put downward pressure on interest rates. The labor market is cooling off from the early Easter. We don’t foresee any inflationary pressure or recessionary pressure from the labor market. Since the unemployment rate stays unchanged at 4.5%, the Nonfarm payroll employment had shift from (+177,000) in March to (+88,000) in April. We expect that the policymakers at this week's Federal Open Market Committee meeting (May 9), will leave the Fed funds target rate unchanged, at 5.25% due to the strong March and weak April jobs reports We think the Fed may wait for another month for their decision making. Any surprises in the May jobs report could play a big role in the two days of FOMC deliberations in June(27/28), where the bias statement could be put on the table if payrolls come up short again. Since there are no changes in the Fed funds rate, we believe that there will be no big changes in the bond, stock, and dollar market. Any Questions?