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The Non-farm payrolls job report showed that the US economy unexpectedly added 339,000 jobs in May 2023, way above market forecasts of 190,000, and following an upwardly revised 294,000 in April.
Accordingly, the market reaction saw the US dollar gain momentum after suffering heavy losses on Thursday and the futures markets in the United States kept their initial gains on the positive print.
The job gains in the United States occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.
The unemployment rate in the US increased to 3.7 percent in May 2023, the highest since October 2022 and above market expectations of 3.5 percent, taking the positivity of the report.
Despite this uptick, the jobless rate remained historically low and suggested the labour market remained tight, however, even with the uptick its unlikely to worry the Fed at this stage.
The average workweek for all employees on US private Non-farm payrolls fell slightly to 34.3 hours in May of 2023, the least since the labour shock during the start of the pandemic in April 2022, below market forecasts of 34.4. The figure also marked a slight retreat from 34.4 hours in the prior two months.
Yesterday’s ADP private businesses report showed that in the US created 278,000 jobs in May of 2023, compared to a downwardly revised 291, — in April and well above forecasts of 170,000.
This number comes of the back of a week with bad economic data from the United States, as the ISM jobs report showed a notable contraction. Europe and China also showed a slowdown.
Ahead of the report, the market was pricing a 29 percent chance of a Fed Reserve will hike on June 12, however, now the market is pricing in just a 27 percent chance of a hike.
This is the 15th consecutive report that has beaten the economist consensus, further underscoring how analysts have gotten the job situation wrong on a consistent basis.
