VIEW US May payrolls rise more than expected

Reuters Interview 6/2/22
June 2, 2022
CNBC Interview 6/3/22
June 3, 2022

VIEW US May payrolls rise more than expected

Signage for a job fair is seen on 5th Avenue in Manhattan, New York City, U.S., September 3, 2021. REUTERS/Andrew Kelly

NEW YORK, June 3 (Reuters) – U.S. employment increased more than expected in May, while the unemployment rate held steady at 3.6%, signs of a tight labor market that could keep the Federal Reserve’s foot on the brake pedal to cool demand.

Nonfarm payrolls increased by 390,000 jobs last month, the Labor Department said on Friday. Data for April was revised higher to show payrolls rising by 436,000 jobs instead of 428,000 as previously estimated. The report also showed solid wage gains last month, sketching a picture of an economy that continues to expand, although at a moderate pace. read more

MARKET REACTION:

STOCKS: S&P e-mini futures eventually extended losses to down 1.0%, pointing to a weak open on Wall Street

FOREX: The dollar index extended a gain to +0.39%

COMMENTS:

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“The good news is that wage (growth) has seemed to stop going up for now. And that’s the key. This report plays into the hands of the Fed in that they’re going to have to hike rates at least another 150 basis points. That’s the bottom line.”

“The stock indices are bouncing off their lows.”

“The employment market remains strong, and at least for now wages are not climbing faster than they were.”

“But when you have manufacturing (job growth) slowing down, that’s a key sector of the economy. That’s a sign of a weakening economy that’s headed for recession.”

SHAWN CRUZ, HEAD TRADING STRATEGIST, TD AMERITRADE, CHICAGO

“Everyone wanted to know if we would see the impact of Fed tightening show up in this report, there was a little bit of a concern there was going to be a miss on the downside but it actually beat quite a few economists’ expectations on the upside. Overall this is a solid report, the Fed decision was already a done deal so it is not like this is really going to matter for that. This was more about what does this tell us about underlying demand, the economy’s ability to handle everything going on and are we going to see leveling off in any major sector in a big way? But we didn’t really see any of this, there was leisure and hospitality was up, professional and business services, transportation and warehousing, so this was a good report that shows the general populace is going back into the labor force.”

“The one interesting thing here was the participation rate ticked up, that is a sign that either it is the cost of living or generally higher wages because there was some good wage growth here too, is pulling people back into the jobs market and to the extent that inflation is due to labor issues where they just can’t hire people to produce, that might be abating. But it doesn’t really solve the overall bigger drivers of inflation, it doesn’t solve China’s zero-COVID policies and it doesn’t solve the Russia and Ukraine situation but it does show some resiliency in the U.S. economy, at least for the time being.”

BRIAN JACOBSEN, SENIOR INVESTMENT STRATEGIST, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN

“There isn’t clear and convincing evidence that inflation is slowing or that the labor market is cooling. There may be some hints that job hiring is slowing. The diffusion indexes ticked down showing that the job gains aren’t as broad as they used to be.”

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