So at least we have that to look forward to....

I have the flu, and no one should have to read a monthly employment report this bad feeling this sick. I'm sorry, this is totally unacceptable. The assignment will be marked incomplete. The economy has a month's extension, and the final grade will be issued next month. Go away and don't ever do this to me again.

Overall link. 

Household Survey. By golly, this hurts. Just accelerating into the first trough. Since February, our two-month total of job losses is 200K. That is unfortunately far beyond the limits of resolution on this survey. It does not help that last month's reported drop was 31K and this month's reported drop is 169K. 

The reason the unemployment rate is dropping is because the participation rate is dropping. 58.4%. Last April's participation rate was 58.4%, and this April's participation rate is 58.4%, and we got a whole lot of nuthin' going on. The not-in-labor-force grew by 522K this month. Well that is not really a surprise, because it's 2012 You expect to see retirements accelerate right now. But if the economy were slightly healthier, you'd expect to see the young 'uns moving into the labor force to pick up vacated jobs in higher numbers. Instead, the cosmos is filled with fever, muscle pain and the echoing sound of no freakin' job creation. Up until the last few months we DID have net job creation, so we cannot pretend that everything's fine.

The establishment survey looks better, but unfortunately there are some disturbing elements. Couriers and messengers fell, grocery stores are still cutting a bit, and although general merchandise gained handily, I'm afraid a good chunk of that is a calendar artifact. 

I can't run through the totals in the ES and not just know that we have shifted to the point where job destruction has outpaced job creation. We have a pop up in temp employment, which I believe to be real and an indicator of caution in permanent hiring. 

When you factor in the substantial gains in the initial claims series, it's clear that we have red just about pacing green in the following B.E.D. graph (which is only through Q3 2011). Maybe a little above green. It's a very negative development.

Now, if Wonder Dummy is right, this only lasts for a few months and then it shifts back. If Wonder Dummy is wrong, great sorrow ensues.

Wonder Dummy is far too febrile to give you a blow-by-blow of all the bloody gore and mayhem going on in Europe, but it seems from the Markit PMIs that Europe fell right through the floor in April. Several main structural supports gave way, and BANG! down it came. This time it's worse, because the Czechs and the Poles are drawn in. Germany is definitely in a skipping recession and may be entering full recession, and it's the best in Europe!

This has implications for the US. Our economy will be negatively affected in the months to come, as will the Chinese and Japanese economies. Therefore an employment report like this rather accentuates the future difficulties. The North American (Canada, US, Mexico) net manufacturing trend is holding up the global trend, so one must develop a certain fatalism about the limits.

I was expecting a drop in Household Survey employment of about 50-70K, not the 169K. Rail seems to be hanging in at present YTD levels without more degeneration, but the problem with this is that now we are well into the period last year when the Japanese disaster showed up strongly in our figures. To keep current pace we should start gaining YTD YoY.