Nonfarm payrolls increased by 272,000 for the month, up from 165,000 in April and far exceeding the Dow Jones consensus estimate of 190,000.
Nonfarm payrolls increased by 272,000 for the month, up from 165,000 in April and far exceeding the Dow Jones consensus estimate of 190,000.
Meanwhile, the unemployment rate rose to 4%, breaching that level for the first time since January 2022. This rise occurred even though the labor force participation rate decreased to 62.5%, down by 0.2 percentage points. The household survey used to compute the unemployment rate showed that the number of people reporting employment dropped by 408,000.
Job gains were mainly in health care, government, and leisure and hospitality, in line with recent trends. These three sectors added 68,000, 43,000, and 42,000 positions respectively, accounting for more than half of the total gains.
Other notable growth areas included professional, scientific and technical services (32,000), social assistance (15,000), and retail (13,000).
Regarding wages, average hourly earnings increased more than expected, rising 0.4% for the month and 4.1% from a year ago. The respective estimates were for increases of 0.3% and 3.9%.
Stock market futures declined while Treasury yields surged following the report.
This report comes at a time when investors are anxious about how long the Fed will maintain its benchmark borrowing rate at the highest level in about 23 years. Recently, policymakers have shown reluctance to cut rates soon as inflation remains above the central bank’s 2% target.
Currently, markets anticipate an initial rate cut in September, followed by another in December.
The Fed has not lowered rates since the early days of the Covid pandemic in 2020 and has raised them 11 times between March 2022 and July 2023. The benchmark federal funds rate is currently targeted between 5.25% and 5.5%.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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