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May US non-farm payrolls +559K vs +675K expected

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Non-farm payrolls report highlights for May 2021:

unemployment rate
  • Prior was 266K (revised to 278K)
  • Unemployment rate 5.8% vs 5.9% expected
  • Prior unemployment rate 6.1%
  • Participation rate 61.6% vs 61.8% expected (was 62.8% pre-pandemic)
  • Prior participation rate 61.7%
  • Underemployment rate 10.2% vs 10.4% prior
  • Average hourly earnings +0.5% m/m vs +0.2% expected
  • Average hourly earnings +2.0% y/y vs +1.6% expected
  • Average weekly hours 34.9 vs 34.9 expected
  • Two month net revision +27K
  • Change in private payrolls +492K vs +610K expected
  • Change in manufacturing payrolls +23K vs +25K expected
  • Long-term unemployed at 3.8m vs 4.2m prior
  • The employment-population
    ratio, at 58.0% vs 57.9% prior (61% before pandemic)
  • Full report

The drop in the unemployment rate is only because of falling labor force participation, which isn’t something you want to see. This is a disappointing number but it’s not some kind of catastrophe, it’s well within the accepted range. It’s a goldilocks number for stocks because it pushes a taper further off the table but doesn’t point to a slowdown in the economy.

That said, I would have hoped that the April-May reopening in the US economy would have led to much more than an average of +418K jobs in those two months.

The US dollar is down 25-35 pips across the board after the headlines.

The non-seasonally adjusted number was 973K. The average non-seasonally adjusted number has been 634K above the headline in the past 10 years in May.

Biden will speak about the jobs report at 10:15 am ET, just like he did last month.

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