It's almost that time again, America: We're less than 24 hours away from the latest jobs report, which could help decide the 2012 presidential election and set the tone for the stock market for the next month. Sadly, it's looking like another bad one.
Let's stipulate right up front that the monthly jobs report is basically a crap shoot, with the government using surveys to guesstimate a tiny change in a huge number. Economists predict the economy added 150,000 jobs in May, according to Briefing.com, to a total of about 133 million U.S. nonfarm payroll jobs. That's a change in payrolls of less than 0.12 percent. The slightest wobble in that number makes a huge difference in how the report is perceived. A couple of hundredths of a percentage point higher, and the report will be a "good" one, deserving of a surge of joy on par with the 1984 Miracle on Ice. A similar wobble lower, and the report will be "bad," like we're pushing our grocery cart full of belongings one step ahead of the cannibals in "The Road."
April's jobs report was one of the "bad" ones, with payrolls growing by just 115,000, compared with the 170,000 economists expected, and the unemployment rate dropping to 8.1 percent mainly because millions of people gave up looking for work. The report contributed to a 6 percent decline in the Dow Jones Industrial Average in May. It may have helped drag down President Barack Obama's Gallup job-approval rating, from 51 percent before the report to 47 percent on Thursday.
That has lots of people, including the presidential candidates, understandably wondering whether the May jobs report, due at 8:30 a.m. EDT on Friday, will be any better. It's a pointless endeavor, only slightly less futile than trying to guess the outcome of a coin toss.
But let's go ahead and do it anyway! Unfortunately, the signs are not looking good. Ian Lyngen of brokerage firm CRT Capital helpfully compiles a list of key employment indicators for his firm's clients every month, and he says that seven of 11 indicators this month are pointing to a disappointing report. And even some of the positive indicators are only barely positive.
Bad: An employment index that's part of the Philadelphia Fed's monthly survey of business conditions fell in May to -1.3 from 17.9 in April. That was the first negative reading in nine months.
Bad: The Conference Board's employment reading in its monthly consumer confidence survey was the lowest so far this year. The difference between the percentage of consumers saying jobs are "hard to get" and the percentage saying jobs are "plentiful" fell to -33.1 in May from -29.7 in April.
Bad: The Liscio Report, a private forecasting group with a decent track record of jobs report predictions, expects to see just 125,000 jobs created in May.
Bad: May job reports are more often than not worse than economists expect -- they've been disappointing 53 percent of the time over the past 15 years, according to Lyngen. And when they miss, they miss big: The average miss during that time is -108,500 jobs.
Bad: The employment component of the latest Chicago Purchasing Managers report on regional business activity fell to 57 from 58.7 in April.
Bad: Challenger, Gray & Christmas, a private consulting firm, released a tally of announced layoffs that rose to 61,887 in May, the highest since September 2011.
Bad: The payroll processing firm ADP Employment said private nonfarm payroll jobs went up by just 133,000 in May, below the 150,000 jobs economists expected.
On the brighter side, the number of new weekly unemployment claims was lower in May than in April, as was the number of people drawing unemployment benefits for a week or more. History tends to favor a lower-than-expected unemployment rate in May, Lyngen said. And another regional manufacturing survey, the Empire State index, showed a slight gain in employment in May.
But Lyngen calls these bright spots "shaky," noting that unemployment claims are generally still way too high. They rose last week to 383,000, not far from their highest levels of the year.
And even if we get 300,000 jobs on Friday -- which will clearly be a "good" number -- we will still be a long way from making up the 5 million jobs still missing since before the recession began.
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