US jobs data is more volatile than ever following the Covid pandemic. We look at this latest report.
US May Jobs report
One of the world’s most watched pieces of economic data, US monthly employment data, surprised to the downside for a second month running.
US workers back on the payroll came in at 559,000 compared to economist estimates of between 650,000 and 750,000.
The unemployment rate declined to 5.8%, down from 6.1% in April and below forecasts of 5.9%.
US equity futures ticked higher immediately following the data, with the S&P 500 index within reach of a record high.
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Worries that the US central bank might step in quicker than previously expected to try and slow the overall economy have now eased, supporting stock prices.
A shortage of suitable workers to fill positions, child-care demands, and enhanced unemployment benefits are all factors potentially slowing jobs growth.
That said, other data within the report did raise possible concerns.
Average hourly earnings rose by 2% compared to forecasts for nearer to 1.6%. Higher wages are often compensated for by companies with higher prices.
Price increases could force the Federal Reserve to act – either by reducing printed money, so-called Quantitative Easing (QE), or by raising interest rates.
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In all, while the headline figure for this latest jobs report is marginally disappointed, the now familiar theme of bad news being taken as good news looks to have repeated.
But the thoughts of the US central bank remain paramount for investors globally. Considerations which are next outlined at the Fed’s next meeting on 16 June.
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