The Bureau of Labor Statistics reported a surprising increase in nonfarm payrolls by 172,000 in May, down slightly from an upwardly revised 179,000 in April, and well above the Dow Jones estimate of 80,000. The unemployment rate remained steady at 4.3%.
Gus Faucher, chief economist at PNC, noted that the labor market is stronger than last year, despite challenges like high energy prices and inflation. Job gains were broad-based, with leisure and hospitality adding 70,000 jobs, local government contributing 55,000, and health care adding 35,000.
Average hourly earnings rose by 0.3% for the month and 3.4% year-over-year, aligning with Wall Street expectations. Revisions to previous months' data also painted a more favorable picture, with April's numbers revised up by 64,000 and March's by 29,000. Heather Long, chief economist at Navy Federal Credit Union, stated that the hiring recession is over.
Following the report, stock market futures were mostly negative, and Treasury yields rose sharply. The solid job numbers are likely to deter the Federal Reserve from lowering interest rates soon, as noted by Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. The Fed has been cautious, focusing on inflation while observing labor market developments.
Overall, the report suggests a resilient labor market, which could impact economic policy moving forward