Nonfarm payroll employment edged up +88,000 in April, and the unemployment rate was essentially unchanged at 4.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains continued in several service-providing industries, including health care and food services, while employment declined in retail trade and manufacturing.
This was lower than the expected 100,000 and far weaker than it even looks. 25,000 of those 88,000 jobs were government jobs. In addition 28,000 goods producing jobs were lost.
- Core capital spending for the quarter is negative
- First Quarter Advance GDP came it at 1.3%
- Companies are downsizing managers.
- Existing home sales had biggest monthly slump in nearly two decades
- US auto sales were terrible.
- The Philly Fed manufacturing outlook was near zero
How anyone could have expected good job growth in the face of those statistics is unexplainable. But more amazing yet are the Birth/Death job assumptions this month.
In the face of all that slowdown, somehow the BLS model added 317,000 jobs for the month.
Economic Deceleration Contained to Overall Economy
U.S. job growth in April slowed to 88,000, less than the 100,000 economists expected. And that’s actually the good news.
* The bad news is related to the comical shenanigans of the the Birth/Death Model.
* The Birth/Death model contributed 317,000 adds.
* That’s not a typo. That’s 317 thousand adds.
* According to Minyanville Professor Scott Reamer, since 1999 there has been only one other month in which the add was bigger, January 2004.
* For some perspective, in the 36 month period ending March 2002 – 36 months – the total adds from the birth/death model were 353,000. Over 36 months.
* Since the beginning of the year, the birth/death model has accounted for a net 388,000 jobs.
* Last year it added 964,000 jobs.
* The kicker is that the Bureau of Labor Statistics refuses to allow academics and commercial economists access to the models they use for the birth/death additions.
2. GM Losses Contained to Auto Sales and Subprime Lending
General Motors’ (GM) first-quarter earnings fell nearly 90% due to heavy losses related to subprime lending at GMAC, the carmaker’s financial services arm.
* Here’s what passes for “good news” over at GM:
The net loss from GM’s core North American automotive operations was “only” $42 million.
* Woo hoo!
* GMAC reported a first-quarter loss of $305 million earlier this week, compared with earnings of $495 million a year earlier.
* ResCap, the company’s home-lending unit, lost almost a billion dollars.
* As if that’s not sad enough, do you have any idea what the company’s best markets are?
* Emerging markets. The Asia-Pacific region, Latin America, Africa and Middle East divisions accounted for nearly one-third of the GM’s vehicle output.
* Latin America, Africa and Middle East were by far the largest contributors to GM’s earnings, reporting a record first-quarter profit of $201 million, according to the Financial Times.
* So, think about this for a moment:
America’s largest car maker, number five in the Fortune Global 500, employing 335,000 people, is now almost entirely dependent on emerging markets just to remain operational.
* Oh, one last thing before we forget. Where exactly do all those consumers in emerging markets get their money?
* Pick up a random object on your desk and look where it was made.
* That’s right. They get it by exporting things to U.S. consumers and getting dollars in return.
If there was ever any doubt about how flawed that birth/death model is, there certainly should be none now.
Mike Shedlock / Mish/