May data on the labor market is quite modest - only 38 thousand new jobs..This is the worst result since September 2010 - on AMarkets materials.
Schedule - month change in the dynamics of NFP (non-farm payrolls):
According to Barclays economists, the current dynamics of the labor market speaks volumes about its pre-crisis mood. Since 1960, episodes of significant slowdown in the labor market is always preceded recessions. More specifically, the most critical moment ever happened shortly after, when the growth rate fell below the monthly average of the preceding period of expansion of about 15 months in length. In 4 of the last 5 months the growth rates were lower than the monthly average period of expansion. The risk of a recession - about 30% in the segment of the next 12 months. Probability grow strongly if the June data also will be weak.
Schedule - growth in the labor market signal a recession:
Barclays Private model, also based on labor market data suggests that America will sink into recession after 3 months.
Rights Barclays team or not - time will tell. One thing is clear - the weak labor market will definitely slow down the Fed's plans to tighten the economy. If it is really bad - will start next QE. Another QE - a new surge of positivity in the financial markets. However, in the moment the situation is complicated by the elections. And we must understand that Trump is uniquely associated with an increase in interest rates. And the fertile ground for a vote in favor of Trump - this is actually a rise in interest rates. Therefore, a positive surge can not happen ...
Recall that a recession in the classic sense - it is a situation, when GDP growth slows down 2 consecutive quarters.