Announced this morning, the economy added 559,000 jobs in May, less than expected. The Leisure and Hospitality industry was strong, adding 292,000 jobs, while the Construction sector was weak, as -20,000 jobs were lost. The Unemployment Rate fell three tenths to 5.8%, a larger fall than expected. Average Hourly Earnings increased 0.5% in the month and is up 2.0% on an annual basis, higher than expected, while Average Weekly Hours decreased one tenth to 34.9. Overall, a slightly disappointing report as the headline number was below forecasts, but the unemployment rate fell a bit more than expected. The increase in average hourly earnings may suggest that companies are working hard to bring people back to work by offering more competitive wages, further fueling the debate on whether inflationary pressures will be transitory or longer lasting and when the Federal Reserve will need to adjust policy. Either way, the employment figures also suggest it will take some time for the labor market to fully heal from the effects of the pandemic. In all, bond yields are now little-changed after ticking lower following the report and equity futures are higher heading into the market open.
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