U.S. job growth nearly doubled from May forecast, an unexpected sign of labor market resilience ahead of the Fed’s decision on whether to keep rates on hold or proceed with further rate hikes became.
The economy added 339,000 new jobs in the nonfarm sector last month, compared with an expectation of about 195,000, according to figures released by the Bureau of Labor Statistics on Friday. The figures for the last two months were also revised upwards.
Employment growth was broad-based, with strong increases in professional services, health care, leisure, hospitality and construction.
But while headline payroll data, based on responses from businesses, hinted at a very hot job market, the BIS household survey showed further signs of cooling.
A household survey showed employment fell by 310,000 and the unemployment rate rose to 3.7% from 3.4% in April. Month-over-month wage growth slowed to 0.3%, slightly lower to 4.3% on an annualized basis, but still well above the roughly 3.5% level commonly thought to be the requirement for the Fed to reach 2% annualized. rice field. Inflation target in cents.
A snapshot of an interactive graphic is shown. This is most likely due to being offline or having JavaScript disabled in your browser.
Employment and wage growth are the main drivers of inflation, especially in the service sector, and economists and officials are watching signs of a slowdown in these measures as indicators that price pressures are also easing. are doing.
The unexpectedly strong data could cast doubt on expectations that the central bank will pause its rate-hiking cycle at its next meeting in mid-June after 10 straight rate hikes.
The data bolstered investor expectations that the Fed would raise interest rates again this summer. In futures markets, investors are pricing in a 45% chance of a June rate hike, up from about 25% on Thursday. A rate hike by July is almost priced in
Two-year Treasury yields, which fluctuate in line with interest rate expectations, rose 0.09 percentage points to 4.43%.
A snapshot of an interactive graphic is shown. This is most likely due to being offline or having JavaScript disabled in your browser.
Several senior central bank officials had suggested this week that they could suspend tightening for a month to give them more time to assess the effectiveness of previous measures.
Philip Jefferson, who was nominated by President Joe Biden as the next Fed vice chairman, said Wednesday that if he forgoes a rate hike at its next meeting, the committee will need more data before making a decision on the extent of additional policy enhancements. will be able to confirm,” he said. But the moratorium will not stop the central bank from raising rates again in July, he added.
Philadelphia Fed President Patrick Harker also hinted at a one-day rate hike.
But Friday’s data is the latest in a string of figures highlighting the challenge of getting inflation back to target, given rising job openings and still-high core inflation. Cleveland Fed President Loretta Mester told the Financial Times earlier this week that there was “no compelling reason to pause.”
Guy Levas, chief fixed-income strategist at Janney Montgomery Scott, said the report “slightly” increased the chances of a Fed rate hike in June, but “mixed” data swayed policy makers’ attitudes. He said it was unlikely to change much.
“I like to think the Fed is using the precautionary principle: if you’re in a dark room, go slow. [and] Today’s data don’t shed much light,” he said.
The post US economy defies slowdown forecasts, adding 339,000 jobs in May appeared first on Commerce Digest.
source https://commercedigest.net/us-economy-defies-slowdown-forecasts-adding-339000-jobs-in-may/
Commerce Digest 