Although it has been slowly healing, the job market is still relatively weak by historical standards. While recent growth in payrolls has been more respectable, the recovery is still appropriately seen as subpar. You still might call it, the "Rodney Dangerfield job market."
Those of us of a certain age might remember the late comedian Dangerfield, whose rapid-fire self-deprecating act usually included the phrase, "I get no respect, no respect at all."
Reports on tap this week
This week we get:
- The Labor Department's report on May employment, due at 8:30 a.m. Friday (all times Eastern).
- The Institute for Supply Management manufacturing index, due at 10 a.m. Monday.
- The Federal Reserve's Beige Book, due at 2 p.m. Wednesday.
The Fed connection
The strength of the job market has always been critically important, whether because of the impact on individuals and families, the political landscape and overall growth of the broader economy. These days, it has a direct impact on the Federal Reserve's commitment to keep interest rates low and to purchase some $85 billion in Treasury bonds and mortgage-backed securities. There's been increasing speculation that modest improvement in the job market might soon be sufficient to prompt the Fed to cut back on the size of those asset purchases, although Chairman Ben Bernanke has stopped short of giving a firm signal that the Federal Open Market Committee is ready to begin such so-called tapering.
This jobs report
The upcoming employment report for May is expected to look very much like the one for April. That report showed payrolls expanding by 165,000 jobs, with unemployment at 7.5 percent. The jobless rate has declined 0.4 percent since January. About 4.4 million Americans are said to be out of work for 27 weeks or more. Millions more are working in jobs where they've had to settle.
Look for "job market growth to be steady and sustainable," says William Dunkelberg, chief economist for the National Federation of Independent Business. Dunkelberg, who is also emeritus professor of economics at Temple University, says the rate of employment is "not enough to make major dents in the unemployment rate."
What about the outlook?
The most recent survey by the National Association for Business Economics calls for unemployment to fall to 6.8 percent by the fourth quarter of 2014. The group's panel of economists looks for monthly growth in payrolls to accelerate to nearly 200,000 jobs next year. Economist Nayantara Hensel with National Defense University notes, however, that the real impacts of mandatory federal budget cuts may begin to have a more meaningful impact soon. "The pattern of military and federal spending cuts will occur in the coming months," Hensel says, adding that "military outlays are usually about 20 percent of federal outlays on a monthly basis." She's concerned that the damage to the economy could be worse than many expect.
The other reports
Also this week, the Institute for Supply Management releases its monthly gauge of the manufacturing sector. The previous report found that manufacturing activity was expanding at the slowest rate of the year so far. The group's index slipped 0.6 percent to 51.3, with any number above 50 signaling growth. The upcoming index could signal further slowing in manufacturing. Says economist Robert Brusca with Fact and Opinion Economics, "We should be on the lookout for a weaker ISM for May." Indicating the manufacturing soft patch is being offset, he says, "Fortunately housing and the services sector appear to be getting better."
The Federal Reserve's Beige Book survey contains economic information from around the country. It is prepared for the central bank's upcoming policy-setting session, June 18 and 19. The Beige Book sets the mood for the description of the economy set forth by the Fed at the end of its two-day session.
This week in business history: SpaceX Falcon 9 maiden flight
On June 4, 2010, a big step in the privatization of spaceflight took place. SpaceX Corp.'s unmanned Falcon 9 was launched from Cape Canaveral into low-earth orbit. Founded by entrepreneur Elon Musk, also known for PayPal and Tesla Motors, SpaceX is now supplying the International Space Station. In coming years, it looks to send a manned rocket into space.
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