Asset Classes

Free investment financial education

Language

Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts

US Labor Market On Fire: May Jobs Data Reveals Employment Boom, Steady Wage Growth, Putting The Fed On The Fence

Posted June 2, 2023 at 11:45 am
Piero Cingari
Benzinga

ZINGER KEY POINTS

  • Nonfarm payrolls came in at 339,000 in May, far above the expected figure of 190,000, indicating strong employment growth.
  • Tightening labor market puts Fed in policy dilemma whether to hike or not in June.

The U.S. labor market is hot and continues to show tight conditions, posing a difficult dilemma for the Federal Reserve regarding whether to raise interest rates further or hit the pause button.

Nonfarm payrolls increased by 339,000 in May, far exceeding economists’ expectations of 190,000 and rising from April’s upwardly revised 294,000 increase, the Bureau of Labor Statistics reported Friday. 

The unemployment rate advanced from 3.4% to 3.7%, contrary to forecasts of an increase to 3.5%.

The average hourly wage increased by 0.3% month-over-month, in line with expectations of 0.3% but slowing from the prior month’s gain of 0.4%. Annual wage growth was 4.3%, falling short of both expectations and the prior figure of 4.4%.

Key Takeaways From May Jobs Report

  • The U.S. economy added 339,000 nonfarm payrolls in May, surpassing expectations of 190,000, according to Trading Economics, and higher than the previous month’s 294,000 surge. The May’s figure was in line with the average monthly gain of 341,000 over the prior six months.
  • The change in total nonfarm payroll employment for March was revised by 52,000 jobs, from 165,000 to 217,000, and the change for April was revised higher by 41,000, from 253,000 to 294,000.
  • The unemployment rate edged 0.3% higher to 3.7% in May, contrary to forecasts of an increase to 3.5%. The number of unemployed persons rose by 440,000 to 6.1 million, up from 5.7 million in April. 
  • Average hourly earnings on U.S. private nonfarm payrolls increased by 11 cents, or 0.3%, reaching $33.44 in May 2023, matching market expectations. 

Sector-Specific Employment Changes

May’s Jobs Report Key For Fed Policy

  • Inflation and labor market conditions are crucial economic indicators tracked by the Federal Reserve to assess monetary policy decisions.
  • This employment report is particularly important because it is the last major economic report before June 14, when the May inflation rate and FOMC policy decision will be released.
  • Strong employment growth and steady wage growth may convince the Federal Reserve to maintain a more restrictive stance for an extended period of time.

Market Reactions, Investor Sentiment Ahead of Wall Street Open

  • Following the publication of the employment report, investors revised their expectations for a June Fed rate increase, increasing the probability from 20% to 27%.
  • Futures on the S&P 500 index rose.
  • The yield on the 10-year Treasury note increased by 3 basis points to 3.63%, while the yield on the 2-year note increased by 6 basis points to 4.4%.
    The U.S. dollar index remained unchanged. 

Originally Posted June 2, 2023 – US Labor Market On Fire: May Jobs Data Reveals Employment Boom, Steady Wage Growth, Putting The Fed On The Fence

Join The Conversation

If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Leave a Reply

Disclosure: Benzinga

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Benzinga and is being posted with its permission. The views expressed in this material are solely those of the author and/or Benzinga and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.