Big Miss with May U.S. Jobs Report Signals Growth is Slowing

The U.S. jobs report for May was well below estimates and added just 69,000 jobs, much lower than the previously forecasted 150,000 -170,000 range. The 69,000 jobs added in May is the smallest jobs increase in a year.

The Department of Labor revised the April jobs figures lower to 77,000.

The unemployment rate increased in May to 8.2% from 8.1%

Crude is set to plunge today and have already plunged more than 17 percent last month as traders have worried slowing global growth. 

Neel Kashkari, Pimco Head of Equities, told CNBC’s Squawk Box today that risks in Europe are dominating sentiment right now.  He believes that the poor jobs report increases the chance of more quantitative easing with QE3.

“The latest jobs report increases the chances of QE 3 in near future. The unemployment rate is not going down, U.S. economic growth is slowing, equity markets have pulled back, and now the bond market is telling us there is a risk of a major deflationary shock in Europe” he said.

Kashkari said that he expects more volatility ahead in the equity markets.

“For equity investors today they need to be able to stomach volatility” Kashkari said.

The disappointing jobs report will make it more difficult for President Obama to make a case that the U.S. economy is improving.

The latest trend with the jobs report shows that the employment picture in the U.S. is facing increased challenges. 

Republican presidential candidate Mitt Romney criticized President Obama and his handling of the U.S. economy.  

Romney called the jobs report “devastating news for American workers and American families.”

“This week has seen a cascade of one bad piece of economic news after another. Slowing GDP growth, plunging consumer confidence, an increase in unemployment claims, and now another dismal jobs report all stand as a harsh indictment of the president’s handling of the economy”  Romney wrote in a statement.

China

China’s economy is cooling as Premier Wen Jiabao continues to dampen speculation in the housing market while Euro zone’s austerity measures reduced the demand for exports. Sales rose 11.4 percent in April from a year earlier, the government said yesterday. That’s the smallest gain since October 2009. Manufacturing  is also slowing.

Chinese PMI fell to 50.4, significantly lower than April’s 53.3 print. Reuters survey had projected 51.1. HSBC’s PMI dropped to 48.4 in May, down from April’s 49.3, and weaker than the initial flash reading of 48.7. A PMI figure above 50 suggests an improvement in activity, while one below 50 shows a retraction. HSBC’s PMI survey showing a seventh consecutive month of contraction in the manufacturing sector, signaling a steeper-than-expected weakening in demand at home and abroad.

Europe

Euro zone unemployment has hit a record high, and job losses are likely to keep climbing. The latest figures shows that 17.4 million people were out of work in the 17 nation euro zone which is 11 percent of the working population, the highest level since records began in 1995.

India

Manufacturing growth is slowing in India. The purchasing managers’ index was at 54.8 in May from 54.9 in April, HSBC Holdings Plc and Markit Economics shows.

Inflation accelerated to 7.23 percent in April, the fastest pace among the largest emerging economies.

 

 

 

 

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