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Greg McBride

May payrolls bloated by temporary Census jobs

By Greg McBride · Bankrate.com
Friday, June 4, 2010
Posted: 10 am ET

The monthly employment report was issued at 8:30 a.m. and it was almost as disappointing as seeing a blown call cost Tigers pitcher Armando Galarraga a perfect game on Wednesday night. There were 431,000 jobs added (well shy of the unrealistically high expectations of 500,000), but 411,000 were temporary census jobs. The real measure of job growth is in the private sector, where just 41,000 jobs were added and nearly all came from manufacturing and mining.

April job growth remained at 290,000 but March was revised down from 230,000 to 208,000.

Long-term unemployment continues to be extremely unsettling with 46 percent of unemployed being out of work for longer than six months. That's 6.8 million folks for those of you scoring at home.

Looking at household income, average hourly earnings are up 1.9 percent in the past year and when factoring in the greater number of work hours, the average weekly earnings are 2.8 percent higher than one year ago. Yes, inflation is low but you'd have no trouble finding a litany of common household expenses that have increased more than that over the past 12 months (tuition, gasoline, and depending on where you live auto insurance, to name a few).

Now what does all this mean for interest rates? If it increases uneasiness about the state of the U.S. economy, it likely helps mortgage rates, possibly by bringing them a tad lower now but more importantly keeping a lid on rates over the next several weeks. It also keeps the Fed from entertaining thoughts about interest rate changes anytime soon no matter how loudly Kansas City Federal Reserve Bank President Hoenig objects, which unfortunately for savers means no improvement in savings yields or CD yields anytime soon.

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June 15, 2010 at 1:45 pm

If average weekly earnings are up more than hourly earnings, then people are working longer hours. That is a good trend as longer hours will eventually lead to hiring needs.

However, 411,000 census jobs will soon be over, once again contributing to unemployment. We need to cut government jobs and increase private sector jobs. Yes, capitalism is the way to do that.