U.S. Added 139K Jobs in May, Roughly In Line With Forecasts

The U.S. labor market showed signs of moderating growth in May, but not enough to significantly impact the unemployment rate. The Bureau of Labor Statistics reported nonfarm payroll growth of 139,000, slightly exceeding economist forecasts of 130,000 and down from April’s revised figure of 147,000 (originally reported as 177,000). The unemployment rate remained steady at 4.2%, aligning with expectations.

This May jobs report held particular significance, given a recent trend of economic indicators suggesting weakening growth. These included the slowest ADP jobs growth in over two years, the ISM Services index falling into contraction territory, and a rise in initial jobless claims to their highest level since October. This context fueled anticipation of potential Federal Reserve rate cuts.

Prior to the report, the 10-year U.S. Treasury yield hovered near 4.50%, reflecting increased odds of a summer rate cut. However, following the release, the yield jumped to 4.44%, and market expectations for a July rate cut plummeted from 30% to 16%, according to CME FedWatch. The likelihood of one or more rate cuts by September also decreased, falling from 75% to 65%.

U.S. stock index futures reacted positively to the report, with the Nasdaq and S&P 500 futures showing gains of 0.8% and 0.75%, respectively. Bitcoin, already experiencing a rebound after recent declines, saw a small price increase, surpassing $104,000 following the news.

Further details within the report revealed that average hourly earnings increased by 0.4% in May, exceeding predictions of 0.3% and April’s figure of 0.2%. The year-over-year increase in average hourly earnings reached 3.9%, surpassing forecasts of 3.7% and matching April’s result. The combination of moderate job growth, rising wages, and market reaction to the report paints a nuanced picture of the current state of the U.S. economy.