Source: Glonui.
May Non-Farm Data 'burst'!
According to data released by the US Department of Labor on Friday, the employment population increased by 272,000 in May, far exceeding expectations.
The strong performance of the employment market has weakened expectations of a cooling labor market and dispelled expectations of a rate cut by the Fed this year.
After the data was released, US stocks collectively opened lower. The Dow is now down 0.11%, the S&P 500 index is down 0.06%, and the Nasdaq is down 0.12%.
The yield of US Treasury bonds has risen, and the USD index has risen sharply, now up 0.73% at 104.88.
Spot gold and silver prices plummeted. Among them, the spot silver price fell by 5.7% to $29.512 per ounce, while the spot gold price fell by over 2.66% to $2,312.61 per ounce.
May non-farm employment exceeded expectations.
US May non-farm employment growth surged, and the unemployment rate unexpectedly rose, leading to mixed feelings in the labor market.
Specifically, non-farm employment increased by 272,000 in May, the largest increase since March of this year, significantly higher than the market expectation of 185,000, and a substantial increase from last month's 175,000.
Among them, the service industry is the main driving force of employment growth.
The healthcare industry once again became the industry with the most employment growth, adding 68,000 new jobs. Government recruitment positions rebounded from April, adding 43,000 new jobs, and recruitment positions in leisure and hotel industries also increased by 42,000.
The unemployment rate in May rose to 4%, the first time since January 2022, higher than the market expectation of 3.9%, which has remained below 4% for 27 consecutive months before.
As a key indicator of inflation, average hourly wages increased by 0.4% month-on-month, expected to increase by 0.3%, and increased by 4.1% year-on-year.
In addition, the US Bureau of Labor Statistics reduced the number of non-farm employment additions in March from 315,000 to 310,000, and in April from 175,000 to 165,000.
After revision, the total number of new jobs added in March and April decreased by 15,000 compared to the previous revision.
Pepperstone Senior Research Strategy Analyst Michael Brown said that the US May employment report was mixed.
The report overall contains a hawkish inclination, recruitment continues to grow rapidly, and corporate profits also grew faster than expected, with a 0.4% month-on-month increase and a 4.1% year-on-year increase.
This indicates that the labor market as a whole is still relatively tight.
Dull prospects for rate cuts.
The unexpectedly strong May non-farm employment data is the opposite of the expectations of the Fed and the market.
A strong labor market could fuel inflation, which also exacerbates the Fed's concerns about when and how quickly to cut interest rates.
Because the economy and labor market overall remain stable, inflation still has stickiness, providing a reason for the Fed to maintain higher rates for a longer period of time.
In order to combat inflation, the Fed has raised its policy rate by 525 basis points since March 2022, to its highest point in 2022.
Although the global monetary easing mode is about to kick off, the Fed's turning point seems to be postponed.
State Street analyst Marvin Loh pointed out that any expectation of a rate cut in July is now quickly dissipating.
"The job market continues to run at full speed, which gives the Fed time to assess whether the weakness we see in other data will lead to a slowdown in summer employment growth."
The faster-than-expected increase in US employment in May could mean that the Fed may not begin cutting rates until September at the earliest.
Although the job market has softened somewhat in recent months, its still-solid performance has made the Fed comfortable in deciding when to start lowering borrowing costs.
According to CME's "Fed Watch," traders expect the Fed to maintain its benchmark interest rate next week.
The probability of maintaining interest rates in July has risen to 91.1% (from 78.5% before the non-farm release), and the probability of a cumulative 25 basis point rate cut is 8.8% (down from 22.0% before the non-farm release).
The likelihood of a rate cut in September is 51.6%, lower than the 68% or so before the job report was released.
Seema Shah, Chief Global Strategist at Principal Asset Management, also said that the non-farm payroll report weakened the message sent by other recent economic data that the US economy is cooling down, and also showed that the US economy is far from recessionary areas.
The key is that not only has employment growth erupted again, but wage growth has also unexpectedly increased, both of which are in the opposite direction of what the Fed needs to start easing policies.
However, he still expects the Fed to cut rates in September, but if data like today's comes up again, it is also likely that rates will not be cut.
Editor / jayden