This is a short note about our forecast of the May labor market. We are still bearish on the overall economy with the usual suspects: banking, real estate, and the labor market weighing against vigorous growth.

From the April results, the broad measure of unemployment (including under-employed & marginally attached to labor force) was still 15.9 percent and there were still almost 6 million persons who had been unemployed more than 27 weeks.

The data for May comes out this Friday, June 3.

We do not think the oil price impact is huge, but overall it is a bit negative. There are positives in the Extraction sector, but those are more than offset by negatives in transport and durables manufacturing sectors.

Since February, nonfarm payrolls have increased by more than 220 thousand each month, and we forecast that about 220 thousand occured in May. This forecast reflects a slight slowing in both goods producing industries and in service producing industries. Government sector hiring will be down, dominated by declines in state and local government, which more than offset increases in hiring by Federal government.

The gap between the establishment (payroll) jobs measure and the household survey employment last month was probably an anomoly, and will be corrected at some point. I assume that correction began in May.

Regarding labor force, we project an increase of 99 thousand, a moderate increase. This follows March and April increases of 160 thousand and 15 thousand respectively. The combination of the labor force and the employed persons increase imply that the unemployment rate falls by three tenths: from 9.0 percent in April to 8.7 percent in May.