The US may have actually lost jobs in May, economist says

BlackRock's Rieder: Disappointing, weak jobs number
BlackRock's Rieder: Disappointing, weak jobs number

As if the May jobs picture wasn't bad enough already, one economist said it was even worse.

Nonfarm payrolls actually declined 4,000 during the month, according to Jonathan Wright, a Johns Hopkins economic professor who wrote an analysis Friday for the Brookings Institution, a generally left-leaning think tank.

That number compares to the already-dismal 38,000 count released Friday morning from the Labor Department. The report triggered a decline in the stock market and, perhaps more importantly, a sharp drop in expectations for interest rate hikes this year.

Wright said he arrived at his number by diverging from the government in the way seasonal adjustments are made to the numbers. Whereas the Bureau of Labor Statistics "puts very heavy weight on the current and last two years of data," the Wright method involves going back over six years to measure seasonal patterns, "which makes them more stable over time than in the current BLS seasonal adjustment method," he wrote.

Over the past 12 months, there have been times when the numbers were close and others when they diverged widely, including occasions when Wright estimated considerably more jobs added than the BLS:

A comparison in counts

Date BLS (thousands) Wright

Source: Source: Brookings

The government certainly doesn't need any help making the jobs picture look worse. Economists had been expecting May to show growth of 162,000 jobs, but even those lowered expectations couldn't hold up.

Though the unemployment rate fell to 4.7 percent, its lowest since November 2007, that was largely due to an exodus from the workforce. A more encompassing number that includes discouraged workers and those working part time for economic reasons held steady at 9.7 percent.

Over the past three months, the BLS count has showed average growth of only about 116,000, with March and April revisions subtracting 59,000 from the initially reported numbers. The Wright method puts that average at an even gloomier 107,000 and just 114,000 for all of 2016.

"Unfortunately, neither the alternative seasonal adjustment, nor the weather adjustment, makes today's jobs report any more hopeful," Wright wrote. "They make little difference and, if anything, make the picture more gloomy."

Janet Yellen, chair of the Federal Reserve.
Fed, again, left with egg on its face as recovery falters