Source: Caixin.
In May, the seasonally adjusted non-farm employment in the USA increased by 272,000, significantly higher than the market expectation of 185,000.
Before the pre-market trading on June 7, Financial News reported that the US Bureau of Labor Statistics released its employment situation report. The data showed that the non-farm payrolls in May were significantly stronger than market expectations, but the unemployment rate reached over 4% for the first time in two years.
Specifically, the data shows that the seasonally adjusted non-farm employment increased by 272,000 in May, significantly higher than market expectations of 185,000.
The increase in employment is mainly concentrated in medical care, government departments, leisure and hotel industry, which is consistent with the trend reflected by the 'small non-farm' report. These three industries increased by 68,000, 43,000 and 42,000 respectively, exceeding half of the non-farm employment.
However, the data for March was revised down from 315,000 to 310,000, and the April data was revised down from 175,000 to 165,000. After these revisions, the total number of new jobs added in March and April decreased by 15,000 compared to the original figures.
The data also shows that the US unemployment rate unexpectedly rose to 4% in May, reaching a new high since January 2022. The market originally expected it to remain unchanged at 3.9%. The latest number of unemployed people is 6.6 million, compared with 6.1 million a year ago when the unemployment rate was 3.7%.
However, there was a noticeable weakness in the household survey, which showed a decrease of 408,000 in the measure of employment. In addition, the labor force participation rate unexpectedly dropped to 62.5%, while the market had expected it to remain at 62.7%. The U6 unemployment rate was stable at 7.4%, and the average weekly working hours remained at 34.3.
The key indicator of inflation, the average hourly wage in May, rose by 0.4% month-on-month and 4.1% year-on-year, both higher than market expectations of 0.3% and 3.9%, respectively.
According to media analysis, the non-farm payrolls may pour cold water on expectations for the Fed to start cutting interest rates this summer. Economist Adrian said that the May employment report did indeed close the door to a rate cut in July. After the data was released, the interest rate market no longer fully priced in the scenario of the Fed cutting interest rates before December.
As of the time of writing, the yields on 10-year and 2-year US Treasury bonds both jumped by 12 basis points to 1.41% and 0.96%, respectively; the US dollar index also extended its intra-day gain to 0.6%; spot gold fell more than 2%; spot silver fell more than 4.5%, previously falling more than 5%.
Michael Brown, Senior Research Strategist at Pepperstone, commented that the May employment report has both good and bad aspects. The report overall has a hawkish bias, recruitment continues to grow rapidly, and corporate profits have also grown more than expected, rising by 0.4% month-on-month and 4.1% year-on-year. This indicates that the labor market is still relatively tight overall.
Brown believes that the May employment report seems unlikely to change the outlook for Fed policy. As expected, members of the Federal Open Market Committee (FOMC) continue to prioritize inflation in their dual tasks and may reiterate next week that they have not gained the confidence people are seeking.
Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said that this is a strong report, indicating that there are no signs of any collapse in the labor market. It is beneficial for the economy and corporate profits, but it is a negative factor for the prospect of rate cuts as early as September. Cardillo pointed out that the part of the report that interests the Fed the most is the average hourly wage data, which rose to an annual rate of 4.1%, making it likely that this report will eliminate the hope of a rate cut in September and delay the time for rate cuts until December. 'We will wait for the CPI data next Wednesday.'
Cardillo indicated that the Fed's most interested part is the average hourly wage data, which rose to an annual rate of 4.1%, making it likely that this report will eliminate the hope of a rate cut in September and delay the time for rate cuts until December. 'We will wait for the CPI data next Wednesday.'
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