The Top 10 Takeaways From The May Jobs Report

Numbers don’t lie, but people do.

To cut out the noise, I’ve been diving deep into the payroll data.

There is a divergence developing the two payroll methodologies that all investors should be mindful of.

Background

The Monthly Jobs report has two surveys: 1) Household, and 2) Establishment. Both have different methodologies and should be looked at together. The former includes employed, self-employed, and agricultural individuals. The latter includes jobs (a person with a FT and PT job will be counted as 2) and excludes agriculture and self-employed. Hence the latter is also called Non-Farm Payroll (NFP) report. (I am not an economist, so please do your work on the interpretation.)

In May 2024, the establishment survey (NFP) was strong while the Household was weak. The NFP added 272,000 jobs but HH declined. I will let you draw your own conclusions, but I pay particular attention to divergences.

Here are the top 10 takeaways from the jobs report:

1) The U.S. economy added 0.9 million jobs per HH survey and 2.8

million jobs per the NFP report over the past 12 months.

2) Per the HH survey, the number of employed decreased from April to May and the number of unemployed increased. Over the past 12 months, the number of unemployed increased by half a million.

3) The number of unemployed (over 27 weeks) increased by 220K YoY.

4) The number of part-time workers increased by 600K YoY.

5) The average weekly hours worked are unchanged over the past year.

6) Average weekly earnings increased 3.9% YoY and Average hourly earnings increased 4.9% YoY.

7) Despite a strong increase in total take-home wages, the weakness in the low-end consumer is stark, and growing. Outside of strong themes (Sneakers, Jeans trend), Companies with strong value propositions are outperforming peers. This is apparent in restaurants. In retail, the commentary around Easter weakness (usually a strong seasonal period) by Dollar store managements’ should be taken seriously.

8) Employment in goods-producing categories increased by 300K YoY.

9) Private services employ 1.9 million more workers over 12 months.

10) The Government sector employment grew by 600K jobs over the past year.

Negative Revisions:

Over the past year, the NFP BLS report has been too optimistic, and the negative revisions are quite dramatic. See the chart below.

Thank you for reading!