The employment report came in much as the ADP report had suggested it would. Payroll employment was little changed at 54,000. This is considerably weaker than over the last few months and is in line with other data that suggest the economy has weakened significantly.
The household survey reported that employment rose by 105,000 while the civilian labor force grew by some 272,000. Consequently the unemployment rate ticked back up to 9.1% from 9,0%.
Even with the uptick in the unemployment rate my fed policy index is still calling for a fed funds rate of 1.0%. This implies that the Fed should not renew QE II as the current easing ends.
The workweek was unchanged at 34.4 hours. So with the small gain in employment aggregate hours worked was only up 0.1%
Average hourly earnings rose by 0.3%, but the year over year gain in average hourly earnings is only 1.8% — a near record low.
With weak hourly earnings and only a 0.1% gain in hours worked average weekly wages are only up 2.7 % from a year ago. With the CPI at 3.1% as of April it should be no surprise that the economy is weak.