The robust labor market in the United States continues to keep job creation running at full speed. The economy added a total of 339,000 jobs in May, according to data released by the Bureau of Labor Statistics on Friday. The unemployment rate rose to 3.7% from 3.4% in April, the lowest level since 1969. Well-beating job creation data is making it difficult for the Federal Reserve to take a breather at this month’s meeting after 10 straight rate hikes. Although the decision has not yet been made, the market has been betting on another rise.
The strength of the labor market is much higher than the central bank would like to control inflation. May’s new jobs data are the highest since January and another step in nearly two and a half years of uninterrupted job growth the world’s leading power
Economists expected 180,000 to 195,000 new jobs to be created in May and the unemployment rate to rise by a tenth to 3.5%. Other data released this week shows that there are still almost twice as many vacancies as unemployed. This is raising wages and demand, making it harder for the central bank to contain inflation, which stood at 4.9% in April, well above the Federal Reserve’s 2% target. Once the debt-ceiling crisis is over, rising prices will come back into focus as the US economy’s most pressing problem.
In the United States, the labor market is measured primarily with two surveys: one for businesses and one for households. The first is used as the main reference for the number of jobs created and the second is used to measure the labor force and the unemployment rate. They usually run in sync, but this month the results are different. While 339,000 jobs were created in the survey of companies, the survey of families shows 310,000 fewer people in employment and 130,000 more people in the working population. This explains why the unemployment rate has risen despite the strong increase in employment identified in the business survey.
The Bureau of Labor Statistics has also revised the data upwards for the past few months. It is now noted that 217,000 jobs were created in March, instead of the 165,000 mentioned above, and 294,000 in April, compared to the 253,000 of the original estimate. There are 93,000 additional jobs. In the heat of the economic recovery from the pandemic crisis, 13.6 million jobs have already been created in the nearly two-and-a-half years of Biden’s tenure.
The figures published today at least show that the wage price spiral is not accelerating. In May, the median hourly wage for private sector nonfarm wage earners rose 11 cents, or 0.3%, to $33.44. Over the past 12 months, the average hourly wage has increased by 4.3%, compared to an annual rate of 4.4% in April.
The Federal Reserve’s last monetary policy meeting indicated a possible pause in interest rate hikes after ten straight hikes, based both on the content of the statement and on the press conference by its President Jerome Powell and the published minutes afterwards. Powell has insisted that decisions are made session-by-session based on available data and that it is possible that tightening financial conditions due to the bank run will result in fewer rate hikes being required.
A week and a half before the next meeting, it’s too early to anticipate the decision, but this week there was an intervention by Philip Jefferson, one of the Federal Reserve governors, who was proposed as central bank vice president by Joe Biden, who is tending to pause seemed to indicate that a subsequent rate hike might follow.
“The decision to keep the official interest rate constant at an upcoming meeting should not be interpreted as meaning that we have reached the top for this cycle. “Indeed, if we don’t raise rates at a future meeting, the committee could have more data before making decisions on the degree of further tightening,” he said in a speech at a financial forum.
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