Data released at 20:30 Beijing time on Friday showed that the United States added far more jobs in May than expected, easing concerns about a slowdown in the labor market and reducing the urgency for the Federal Reserve to cut interest rates.
The seasonally adjusted non-farm payrolls in the United States increased by 272,000 in May, far exceeding the expected 185,000 and the previous value of 175,000. The unemployment rate in the United States rose to 4% for the first time since January 2022 in May, higher than the expected 3.9%, ending the record of remaining below 4% for 27 consecutive months. The monthly rate of average hourly wages in the United States in May was 0.4%, exceeding the expected 0.3% and the previous value was 0.2%.
After the data, swap markets no longer fully priced in a Fed rate cut by December. U.S. interest rate futures traders sharply reduced their bets on a September Fed rate cut, now pricing in a 55% chance of a rate cut, compared with a 70% chance before the data.
U.S. Treasury yields soared across the board, and the U.S. dollar index rose 60 points in the short term, up more than 0.5% on the day. Spot gold continued its decline in the European session, falling more than 2% on the day, hitting a low of $2,313.53 per ounce. Spot silver fell 5% on the day.
At the same time, the number of new non-farm payrolls in the United States in March was revised down from 315,000 to 310,000, and the number of new non-farm payrolls in April was revised down from 175,000 to 165,000. After these revisions, the total number of new jobs in March and April decreased by 15,000 compared with the previous revision.
The U.S. Bureau of Labor Statistics said that total non-farm payrolls increased by 272,000 in May, higher than the average monthly increase of 232,000 in the previous 12 months. From the industry perspective, employment in several industries, led by health care, government, leisure and hospitality, professional, scientific, and technical services, continued to rise.
The job market has largely exceeded expectations over the past two years, powering the overall economy. That strength was expected to slow as prolonged high interest rates weighed on hiring plans and broader economic activity. But the latest nonfarm payrolls data seemed counterintuitive again. It was one of the last major reports Fed officials see before next week's meeting, when the central bank is widely expected to keep borrowing costs at a 20-year high.
Economist Mohamed El-Erian said the May jobs report did close the door to a rate cut in July. State Street analyst Marvin Loh also believes that any concerns about a rate cut in July have now been quickly dispelled. The job market is still running at full speed, giving the Fed time to assess whether signs of weakness in other data will lead to a slowdown in job growth in the summer.
In the view of Michael Brown, senior research strategist at Pepperstone, the US May employment report was mixed. The report contained a hawkish bias overall, with hiring continuing to grow rapidly and wages growing faster than expected, up 0.4% month-on-month and 4.1% year-on-year. This shows that the labor market is still relatively tight overall. Overall, the May employment report seems unlikely to change the Fed's policy outlook. As expected, members of the Federal Open Market Committee (FOMC) continue to place more emphasis on the inflation aspect of the dual mandate and may reiterate next week that they have not yet gained the confidence they seek.
The May nonfarm report comes after several recent reports have hinted at some unexpected weakness in the economy. Recent data on retail sales, overall consumer spending, construction and industrial production have all come in below economists’ expectations. But most economists remain optimistic about the near-term outlook, believing the economy is normalizing after a surprisingly overheated period last year, rather than deteriorating in a more worrisome way.
Data released at 20:30 Beijing time on Friday showed that the United States added far more jobs in May than expected, easing concerns about a slowdown in the labor market and reducing the urgency for the Federal Reserve to cut interest rates.
The seasonally adjusted non-farm payrolls in the United States increased by 272,000 in May, far exceeding the expected 185,000 and the previous value of 175,000. The unemployment rate in the United States rose to 4% for the first time since January 2022 in May, higher than the expected 3.9%, ending the record of remaining below 4% for 27 consecutive months. The monthly rate of average hourly wages in the United States in May was 0.4%, exceeding the expected 0.3% and the previous value was 0.2%.
After the data, swap markets no longer fully priced in a Fed rate cut by December. U.S. interest rate futures traders sharply reduced their bets on a September Fed rate cut, now pricing in a 55% chance of a rate cut, compared with a 70% chance before the data.
U.S. Treasury yields soared across the board, and the U.S. dollar index rose 60 points in the short term, up more than 0.5% on the day. Spot gold continued its decline in the European session, falling more than 2% on the day, hitting a low of $2,313.53 per ounce. Spot silver fell 5% on the day.
At the same time, the number of new non-farm payrolls in the United States in March was revised down from 315,000 to 310,000, and the number of new non-farm payrolls in April was revised down from 175,000 to 165,000. After these revisions, the total number of new jobs in March and April decreased by 15,000 compared with the previous revision.
The U.S. Bureau of Labor Statistics said that total non-farm payrolls increased by 272,000 in May, higher than the average monthly increase of 232,000 in the previous 12 months. From the industry perspective, employment in several industries, led by health care, government, leisure and hospitality, professional, scientific, and technical services, continued to rise.
The job market has largely exceeded expectations over the past two years, powering the overall economy. That strength was expected to slow as prolonged high interest rates weighed on hiring plans and broader economic activity. But the latest nonfarm payrolls data seemed counterintuitive again. It was one of the last major reports Fed officials see before next week's meeting, when the central bank is widely expected to keep borrowing costs at a 20-year high.
Economist Mohamed El-Erian said the May jobs report did close the door to a rate cut in July. State Street analyst Marvin Loh also believes that any concerns about a July rate cut have now been quickly dispelled. The job market is still running at full speed, giving the Fed time to assess whether signs of weakness in other data will lead to a slowdown in job growth in the summer.#非农就业人数高于预期
