The Hidden Story Behind May's Jobs Numbers | Episode 142 | 06-07-24

What if a robust jobs report isn't all good news? We dissect the latest mixed signals from the labor market. The US economy added an impressive 272,000 jobs in May, far surpassing expectations, yet the unemployment rate climbed to a two-year high. We break down which sectors are driving these gains and explore the surprising disparity between payroll growth and rising joblessness. The episode provides a look at the complexities behind the numbers, offering you a comprehensive understanding of current labor market dynamics.

Learn how rising average hourly earnings—up 0.4% for May and 4.1% year-over-year—are impacting expectations for Fed rate cuts. Despite strong payroll figures, the equity market remained subdued, while bond yields surged. We'll discuss why rate cuts might be delayed and what economic factors could change the timeline. Tune in for expert insights into the labor market and monetary policy, and find out what this means for your investments and economic outlook. Have questions or comments? We'd love to hear from you at podcasts at Verdence.com.

Well, this morning we got a super mixed jobs report. When we look at the payroll report for the month of May, not too great for those that are expecting rate cuts imminently, though. This is Markets with Megan. It's Friday, june 7th, and we are here to discuss the monthly jobs report that we got this morning. This is one of the most important economic pieces of data that we get every month. It comes the first Friday of each month, and the US economy added more jobs than was expected. They added 272,000 jobs. The expectation was 180,000. What we saw was, though, the jobs were primarily led in the goods producing sector construction, professional business services, leisure and hospitality, and government, so it was actually pretty widespread on where we saw job gains. But on the flip side of it, we saw the unemployment rate rise unexpectedly to a two-year high, and that's because we saw a 408,000 decline in the household employment, so that caused the unemployment rate to actually increase What does all this mean? The other important component of this report was the average hourly earnings. They increased more than expected up 0.4% for the month of May and up 4.1% on a year-over-year basis. That's resulted in the expectations for Fed rate cuts getting pushed out. Why is that? Because the Fed has often talked about wage pressures and what wage pressures do is if you make more money, you'll spend more money. What does that mean? Inflation. So that's what the Fed's been focusing on. That's why we're seeing today the equities have been relatively muted. Not much movement in the equity market. They were up for a bit because of the strong payroll jobs, but now we're kind of losing some of those gains. Relatively muted on the equity side, but on the bond side we're seeing long-term yields, short-term yields, rising significantly on this report. That's because the Fed rate cuts are being pushed out again. We keep having this seesaw back and forth about when the Fed's going to cut rates. Our view is rate cuts are not until the end of this year at the very earliest. Our view is rate cuts are not until the end of this year at the very earliest, beginning of next year most likely. And the only change to that would be if we saw some dramatic fall off in economic growth, which right now we're seeing that the labor market is showing some signs of cracking but not enough to get inflation down. So not enough evidence for the Fed to say, yeah, rate cuts are right around the corner. We'll be back next week. Lots more economic data to discuss and market movements. If you have any questions or comments, please feel free to reach out to podcasts at burdenscom. Thank you,