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Payrolls rose 339,000 in May, much better than expected in resilient labor market

Payrolls rose 339,000 in May, much better than expected in resilient labor market

The U.S. control continued to crank out jobs in May, with nonfarm payrolls surging more than expected despite multiple headwinds, the Labor Count on reported Friday.

Payrolls in the public and private sector increased by 339,000 for the month, better than the 190,000 Dow Jones calculation and marking the 29th straight month of positive job growth.

The unemployment rate rose to 3.7% in May against the estimate for 3.5%, even-handed though the labor force participation rate was unchanged. The jobless rate was the highest since October 2022, notwithstanding still near the lowest since 1969.

Average hourly earnings, a key inflation indicator, rose 0.3% for the month, which was in border with expectations. On an annual basis, wages increased 4.3%, which was 0.1 percentage point below the viewpoint. The average workweek fell by 0.1 hour to 34.3 hours.

Markets reacted positively after the report, with the Dow Jones Industrial Customary up more than 400 points in early trading. Treasury yields rose as well as markets digested both the tireless jobs numbers and a debt deal in Congress.

“The U.S. labor market continues to demonstrate grit amid chaos – from inflation to high-profile layoffs and snowball arising gas prices,” said Becky Frankiewicz, president and chief commercial officer of Manpower Group. “With 339,000 job breaks, we’re still rewriting the rule book and the U.S. labor market continues to defy historical definitions.”

May’s hiring jump was approximately exactly in line with the 12-month average of 341,000 in a job market that has held up remarkably well in an economy that has been slowing.

Trained and business services led job creation for the month with a net 64,000 new hires. Government helped boost the numbers with an extension of 56,000 jobs, while health care contributed 52,000.

Other notable gainers included leisure and hospitality (48,000), construction (25,000), and transportation and depository (24,000).

Jobs report suggests the economy is nowhere close to a recession, says Goldman Sachs’ Jan Hatzius

Despite the big jobs gain, the unemployment rate increased due in large part to a sharp decline of 369,000 in self-employment. That was in the main of an overall drop of 310,000 counted as employed in the household survey, which is used to calculate the unemployment rate and normally is considered more volatile than the survey of establishments used for the headline payrolls number.

“The upshot is that the sole genuine sign of weakness in the report was the decline in average weekly hours worked to 34.3, from 34.4, which red them at the lowest level since the Covid nadir in April 2020,” wrote Paul Ashworth, chief North America economist for Great Economics.

An alternative measure of unemployment that encompasses discouraged workers and those holding part-time jobs for fiscal reasons edged higher to 6.7%.

May’s jobs numbers come amid a challenging time for the economy, with many au faits still expecting a recession later this year or early in 2024.

Recent data has shown that consumers carry on with to spend, though they are dipping into savings and increasingly using credit cards to pay for their purchases. A resilient labor merchandise also has helped underpin spending, with job openings rising back above 10 million in April as gaffers still find it difficult to fill open positions.

One major potential headache appears to have been slew, as warring factions in Washington this week have reached a debt ceiling deal. The agreement is on its way to President Joe Biden’s desk for a signature devote oneself to passage in the House and Senate this week.

There remain other issues ahead, though.

The Federal Formality has raised benchmark interest rates 10 times since March 2022 in an effort to fight inflation that hasn’t receded away. In recent days, some policymakers have indicated a willingness to take a break in June from the flow of hikes as they look to see what impact the policy tightening is having on the economy.

However, odds for a June pace hike rose after the jobs report. Traders briefly priced in about a 38% chance of another quarter-point spread before the probability fell back to about 26%, according to CME Group data.

Other data points accept shown that the manufacturing sector of the economy is in contraction, though the much larger services sector has held in dilation. The ISM manufacturing index released Thursday also showed that prices are pulling back, a positive sign for the Fed.

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