Jobs Report Likely Means Rate Cut, Says NAFCU Economist

WASHINGTON—The latest jobs report – with 75,000 jobs gained in May – reveals inflation-related pressures are minimal, which, combined with other concerns, could force the Fed to cut interest rates, asserts one analyst.

Jobs Report

"Markets appeared to get what they wanted with a weak-ish May employment report. Job growth of 75,000 was well below trend, and only just covered for the downward revision of 75,000 to prior months," said NAFCU Chief Economist and Vice President of Research Curt Long. "Wage growth fell, which confirms that inflationary pressures are minimal. This report, combined with nerves around tariffs, will be enough to force a rate cut from the Fed in either June or July. Whether that is enough to satisfy markets will depend largely on how trade policies evolve."

The unemployment rate remained at 3.6% in May – matching April for its lowest level since 1969 – and the labor force participation rate also held at 62.8%.

In other report data, private-sector payroll employment increased by 90,000 jobs in May. The goods-producing sector increased by 8,000 jobs, while the service sector increased by 82,000 jobs. Public sector employment was down 15,000 from the prior month.

Average hourly earnings increased six cents to $27.83 in May, following April's six-cent increase. Over the last 12 months, wages are up 3.1%.

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