May Non-Farm Payroll - A pocket of slower growth
After weak ADP numbers that were reported earlier in the week, Non-Farm Payroll numbers confirmed the current weak economic conditions that exist south of the border. For the month of May, non-farm payrolls amounted to 54,000 new jobs versus expectations of 165,000 new jobs. The unemployment rate moved from 9.0% up to 9.1% in May, which was again considerably worse than expectations. Earlier in the week, the ADP reported an increase of 38,000 jobs versus expectations of 175,000 new jobs in May, which again disappointed financial markets. With the addition of other weak financial data, market participants have been uncomfortable with the status of current business conditions. After the reporting of these numbers, index futures immediately fell amidst the weakening trend that has been culminating over the last few weeks. Weather, higher commodity prices, and the subsequent effects from the earthquake and tsunami in Japan have hurt overall growth in the short term. Expectations are now for a continuation in growth in the latter half of the year.
Robert Floyd, CFA, is Lead Manager for BirchLeaf Investments (www.birchleafinvestments.com)
