Employment Picture Worsens

Job creation slows. Unemployment rises. Unexpectedly.

The American jobs engine hit stall speed in May, with the economy adding just 69,000 new jobs while the unemployment rate climbed to 8.2 percent.

As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions, and said labor force participation remains near 30-year lows though incrementally better than last month.

In May, stocks suffered through their worst month in two years, and the job-creation figures only added to the gloom. 

Stock market futures indicated a sharply lower open for Wall Street, while investors continued to pour into bonds, sending the 10-year Treasury note yield tumbling to near 1.50 percent.

The report comes a month after the government reported that just 115,000 new jobs were added in April, a number that helped contribute to a general malaise about economic growth.

With worries swelling over the state of the global economy, another weak employment report in the U.S. adds to fears that a sharp slowdown is on the way.

Obama blames Bush.

 
Another summer bummer. But not everyone was surprised at the crappy jobs data.

"Nonfarm payroll has been decelerating since the beginning of 2012," William told CNBC.com. "The probability of an acceleration of that down move is high over the next two quarters."

The data lost positive momentum after failing to hold above the 2011 high of 251,000, and has also remained beneath a multiyear ceiling of around 340,000. During January 2012 "the loss of upside momentum triggered a DeMark exhaustion signal," he said.

An exhaustion signal usually indicates a reversal in the trend. The DeMark Indicators are a collection of sophisticated market-timing tools created by Tom DeMark over the course of nearly 40 years in the financial industry. 

"The key level that everyone in the market should be focusing on [for nonfarm payrolls] is 54,000," William added. "I think that over the multimonth period the probability favors that we test this area and maybe move into negative territory if it is confirmed."