Announced this morning, the economy added 139,000 jobs in May, more than expected but less than the previous month that was revised lower. The Leisure and Hospitality industry was relatively strong, while the Retail Trade industry and Temporary Help Services were both relatively weak. The Unemployment Rate held steady at 4.2% and the Labor Force Participation Rate at 62.4% is two tenths lower than the previous month. Average Hourly Earnings increased 0.4% in May, higher than expected, and grew 3.9% on an annual basis. In addition, Average Weekly Hours were 34.3, which is the same as the previous month.
Another month with jobs added to the economy, albeit at a slightly lower amount than the increase in the previous month. The unemployment rate remained steady which denotes a relatively stable labor market. Average hourly earnings were slightly more than expected and the annual increase is near the 50-year average. Job strength in leisure and hospitality industry seems appropriate as we are entering the summer season.
Overall, the labor market moderated slightly in May but remains intact as tariff negotiations unfold and companies appear hesitant to let people go in the current environment. The Federal Reserve is likely to hold their policy steady until additional clarity on tariff levels emerges. How inflation measures change because of tariff policy and how well consumers hold up in this environment will be key factors for Fed policy and the economy in the weeks ahead.
In all, the yield on the 10-year US Treasury ticks higher following the report and equity futures are also higher as we head into the market open.
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