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The dour news on the economy is continuing to come. First, it was a weaker-than-expected report on consumer confidence issued this past Tuesday. Then, yesterday, we saw the issuance of weak data on initial jobless claims, a poor private-sector payroll report, and a downward revision in first-quarter GDP growth from 2.2% to 1.9%.

Now, this morning, comes a very troubling issuance from the U.S. Labor Department, with the news that non-farm payrolls rose by a mere 69,000 in May, less than half the forecast increase of 155,000, while the unemployment rate edged up to 8.2% from the prior month's reading of 8.1%. Bonds soared and yields, which move in the opposite direction of bond prices, fell sharply. The yield on the 10-year Treasury note dropped sharply to 1.46%, a record low, in response. Those lower rates, which are a dominating influence on home mortgage rates, should translate into even lower borrowing costs for those contemplating a mortgage. Hopefully, that will help underpin a weak housing market somewhat.

Meanwhile, the very poor report on non-farm payrolls is a shot across the bow for second-quarter gross domestic product growth, which may not exceed the aforementioned 1.9% rise inked in the opening three months. Moreover, as if the news could not get any worse, payroll figures for March and April were revised downward. Specifically, the estimated March increase was pared back from 154,000 to 143,000, while April's estimated gain was reduced from 115,000 to 77,000.

Meantime, Federal Reserve officials have intoned that they expect only gradual improvement in the U.S. labor market this year, with the lead bank forecasting that the unemployment rate will dip only to the 7.8% to 8.0% range in 2012. Now, even that modest expectation would appear at risk. This weak report, furthermore, virtually assures that the Fed will not veer from its intention to keep interest rates at historically low levels through 2014. The poor data also raise the chances that the central bank will embark on another bond buying program, a sort of QE3, if you will.

Overall, there was little good in the report, as the average workweek for all employees dipped slightly, while hourly earnings only ticked up by $.02. Combine this report with news that China's manufacturing dipped in May and with data showing a similar result across the euro zone, and the outlook for our economy, where we will be getting our own manufacturing survey issued later this morning, is not compelling to say the least. 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.