U.S. Labor Force Shrinks, Dollar Drops, Japan Hit
June 3, 2016 (EIRNS)—In a development which shocked inattentive economists, the U.S. Labor Department employment report for May showed a second consecutive large shrinkage of the American labor force, with nearly 1.1 million Americans having dropped out of the workforce in April (422,000) and May (642,000) combined. The labor force participation rate and the employment/population rate, which are near 40-year low levels, each dropped by a further 0.2% during the month, and the number of work-eligible Americans out of the workforce is back at just under 95 million, the worst level of the labor force collapse under Obama’s presidency.
The "headline" or heavily adjusted figure for May employment growth, 38,000, was so low—in fact, it was more than cancelled out by downward adjustments to the previous two months—that the dollar dropped very sharply, especially against the Japanese yen. This will exacerbate the dispute caused by Federal Reserve policies and by Obama Administration attacks on Japan’s attempts to stop the "disorderly" rise of the yen. It is part of the broader G7 fight between Prime Minister Abe’s realization that the global economy and financial systems are in severe crisis, and Obama’s "recovery is spreading" nonsense. Japan’s manufacturing index went deep into contraction again in May. It is notable turning toward infrastructure exports, and toward Russia-India-China, to try to reverse the collapse.
Manufacturing is the sad subject of the U.S. employment report as well. Employment levels in manufacturing and in mining (primarily oil and gas) are each 60,000 lower than in December 2015, six months ago—a disastrous collapse of what Obama claimed to be a "manufacturing recovery."
U.S. overall employment, which according to the Labor Department grew by 2.9 million in 2014 and 2.7 million in 2015, now appears to be growing by not much over 2 million in 2016; May’s reported unadjusted employment was 2.2 million higher than in May 2015. The Federal Reserve, whose members spent May trying to assure themselves and Wall Street that they were finally ready to raise interest rates, will now put that off again.
The average hourly and weekly wages of American workers also grew very slowly in May, and were each just 2% higher that one year before; the average workweek hours did not change.