# Instant View: US May payrolls rise up than expected Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-06-03 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: U.S. Employment Shows Strong Growth But Wage Inflation Meta Description: Discover the latest US employment report for May 2022, showing robust job growth and solid wage gains. Stay informed on the tight labour market and potential Federal Reserve actions. URL: https://financedigest.com/instant-view-us-may-payrolls-rise-up-than-expectedhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-06-03t125452z1lynxmpei520lcrtroptp4usa-economy-unemployment-1736815662324-compressed.jpg) NEW YORK (Reuters) – U.S. employment increased more than expected in May, while the unemployment rate held steady at 3.6%, signs of a tight labor market that could keep the Federal Reserve’s foot on the brake pedal to cool demand. Nonfarm payrolls increased by 390,000 jobs last month, the Labor Department said on Friday. [Data for April was revised higher to show payrolls rising by 436,000 jobs](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") instead of 428,000 as previously estimated. The report also showed solid wage gains last month, sketching a picture of an economy that continues to expand, although at a moderate pace. COMMENTS: ANTHONY SAGLIMBENE, AMERIPRISE [GLOBAL MARKET](https://www.financedigest.com/global-market-study-on-battery-pack-for-marine-hybrid-full-electric-propulsion.html "Global Market Study on Battery Pack for Marine Hybrid & Full Electric Propulsion") STRATEGIST, TROY, MICHIGAN What the [market is really focused on is average hourly earnings](https://www.financedigest.com/car-t-cell-therapy-market-to-earn-us-21-8-bn-by-the-end-2031.html "CAR T-cell Therapy Market to Earn US$ 21.8 Bn by the End 2031"), a tick lower than expected .. The labor market is starting to [level off and if we can see](https://www.financedigest.com/fraport-sees-2023-passenger-traffic-at-80-90-of-pre-pandemic-levels.html "Fraport sees 2023 passenger traffic at 80-90% of pre-pandemic levels") wage inflation moderate a bit lower, that’s healthy for the market. “If the wage inflation can come down that’s a more healthy dynamic. (This report) gives permission to the Fed to keep going with their [rate hikes because the labor market](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") is strong. They can worry more about [inflation pressures](https://www.financedigest.com/analysis-china-central-bank-under-pressure-to-ease-is-hemmed-in-by-inflation-fed-jitters.html "Analysis-China central bank, under pressure to ease, is hemmed-in by inflation, Fed jitters") and less about the labor market. The market is still [concerned about wage inflation](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up"). Even at 0.3% that’s still a very high rate. The [market is reacting to the fact that the Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") does need to continue with the rate hikes. If wage [inflation was lower](https://www.financedigest.com/analysis-central-europes-path-to-lower-inflation-strewn-with-hazards.html "Analysis-Central Europe’s path to lower inflation strewn with hazards") the market reaction could be more positive. STEVEN RICCHIUTO, U.S. [CHIEF ECONOMIST](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says"), MIZUHO SECURITIES USA LLC, NEW YORK “To be honest, it’s not going to change anyone’s opinions one way or another. It’s not going to change anything on the Fed’s views, it’s not going to change anyone in the [market’s views](https://www.financedigest.com/insurance-marketing-is-more-targeted-with-the-single-customer-view.html "Insurance marketing is more targeted with the single customer view"). Those [people who are thinking](https://www.financedigest.com/55-of-people-who-regularly-play-sport-dont-think-being-verbally-abusive-to-another-player-makes-them-a-bad-sport.html "55% OF PEOPLE WHO REGULARLY PLAY SPORT DON’T THINK BEING VERBALLY ABUSIVE TO ANOTHER PLAYER MAKES THEM A BAD SPORT") it’s going to cause a pause in September are going to be able to point to things. Those people who think the [Fed’s not going to be able to pause](https://www.financedigest.com/dollar-pauses-for-breath-as-fed-swings-into-focus.html "Dollar pauses for breath as Fed swings into focus") in September are going to be able to point at things. Net-net, it does nothing.” “Now we’re going to see where the balance of [risk comes](https://www.financedigest.com/analysis-watch-out-risk-assets-the-rout-in-bonds-is-coming-your-way.html "Analysis-Watch out risk assets, the rout in bonds is coming your way") in. Have people who have been bullish in the equity market, for example, have they overstayed their hand? People who were bullish in the [bond market last week](https://www.financedigest.com/shares-and-bonds-nervy-as-rate-hike-week-looms.html "Shares and bonds nervy as rate-hike week looms"), are they’re going to get a little bit more scared that they’re not going to get the pause in September. We’re going to see where that balance comes out as a result of this number. “ JAKE DOLLARHIDE, CHIEF EXECUTIVE OFFICER, LONGBOW [ASSET MANAGEMENT](https://www.financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisation.html "Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation"), TULSA, OKLAHOMA For the first five months of the year, this market fell on the anticipation of bad news, the anticipation of higher [inflation and higher interest rates](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister") and the anticipation of war in Europe. And then it fell on the actual news… Now I think the market could use a little bad news. The market may actually embrace some less-than-stellar economic news, because it could [slow the Fed’s](https://www.financedigest.com/dollar-set-for-weekly-loss-amid-expectations-fed-will-slow-hikes.html "Dollar set for weekly loss amid expectations Fed will slow hikes") hand down. The Fed would always rather indirectly [affect the market.”](https://www.financedigest.com/sensor-based-glucose-measuring-systems-market-by-2028-with-technological-advancements-growth-of-industry-overview-and-dynamics-with-affecting-factors-2.html "Sensor Based Glucose Measuring Systems Market by 2028 With Technological Advancements, Growth Of Industry, Overview and Dynamics with Affecting Factors") IAN LYNGEN, HEAD OF U.S. RATES STRATEGY, BMO CAPITAL MARKETS, NEW YORK “One aspect of the [report that I find interesting is that average hourly earnings undershot expectations](https://www.financedigest.com/german-economy-expected-to-skirt-recession-economy-ministry-report.html "German economy expected to skirt recession – economy ministry report") on a month-over-month basis, but it wasn’t enough to lead to a miss over the year-over-year figures, which decelerated from 5.5% to 5.2%. This is consistent with the peak [inflation narrative and doesn’t really](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel") change the overall narrative for the Fed. We are still looking for 50 basis point [rate hikes](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise") in June and July, with a good chance of another 50 basis point move in September.” PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN [CAPITAL SECURITIES](https://www.financedigest.com/rohingya-refugees-in-indias-capital-to-be-given-flats-security.html "Rohingya refugees in India’s capital to be given flats, security"), NEW YORK “The good news is that wage (growth) has seemed to stop going up for now. And that’s the key. This report plays into the hands of the Fed in that they’re going to have to [hike rates](https://www.financedigest.com/hopes-of-slowdown-in-rate-hikes-bolster-shares-ahead-of-u-s-gdp.html "Hopes of slowdown in rate hikes bolster shares ahead of U.S. GDP") at least another 150 basis points. That’s the [bottom](https://www.financedigest.com/business-leaders-flexibility-for-everyone-contributes-to-gender-equality-in-the-workplace-without-affecting-your-bottom-line.html "Business leaders: flexibility for everyone contributes to gender equality in the workplace, without affecting your bottom line") line.” “The [stock indices are bouncing](https://www.financedigest.com/biotech-stocks-pin-bounce-back-hopes-on-ma-boost.html "Biotech stocks pin bounce back hopes on M&A boost") off their lows.” “The employment market remains strong, and at least for now wages are not climbing faster than they were.” “But when you have manufacturing ( [job growth](https://www.financedigest.com/subsiding-delta-wave-seen-boosting-u-s-job-growth-worker-shortages-still-a-constraint.html "Subsiding Delta wave seen boosting U.S. job growth; worker shortages still a constraint")) slowing down, that’s a key sector of the economy. That’s a sign of a weakening economy that’s [headed](https://www.financedigest.com/euro-zone-likely-heading-into-mild-recession-pmi.html "Euro zone likely heading into mild recession-PMI") for recession.” SHAWN CRUZ, HEAD TRADING STRATEGIST, TD AMERITRADE, CHICAGO “Everyone wanted to know if we would see the impact of Fed tightening show up in this report, there was a little bit of a concern there was going to be a [miss on the downside but it actually beat quite a few economists’ expectations](https://www.financedigest.com/ericssons-quarterly-core-profit-misses-expectations.html "Ericsson’s quarterly core profit misses expectations") on the upside. Overall this is a solid report, the Fed decision was already a done deal so it is not like this is really going to matter for that. This was more about what does this tell us about underlying demand, the economy’s ability to handle everything going on and are we going to see leveling off in any major [sector in a big](https://www.financedigest.com/finance-is-the-next-big-sector-to-be-ubered.html "Finance is the next big sector to be Uber’ed") way? But we didn’t really see any of this, there was leisure and hospitality was up, professional and business services, transportation and warehousing, so this was a good [report that shows the general populace is going back](https://www.financedigest.com/its-back-to-school-for-investors-as-uk-student-accommodation-less-vulnerable-to-brexit-shock-reports-jll.html "It’s back to school for investors as UK student accommodation “less vulnerable to Brexit shock” reports JLL") into the labor force.” “The one interesting thing here was the participation rate ticked up, that is a sign that either it is the cost of [living or generally higher wages](https://www.financedigest.com/pensions-awareness-day-could-you-get-by-on-less-than-living-wage.html "Pensions Awareness Day: Could you get by on less than living wage? ") because there was some good wage growth here too, is pulling people back into the jobs market and to the extent that inflation is due to labor issues where they just can’t hire people to produce, that might be abating. But it doesn’t really solve the overall bigger drivers of inflation, it doesn’t solve [China’s zero-COVID policies and it doesn’t solve the Russia and Ukraine situation](https://www.financedigest.com/who-urges-china-to-share-specific-data-regularly-on-covid-situation.html "WHO urges China to share specific data regularly on COVID situation") but it does show some resiliency in the U.S. economy, at least for the time being.” BRIAN JACOBSEN, SENIOR [INVESTMENT STRATEGIST](https://www.financedigest.com/invest-in-infrastructure-to-escape-the-starvation-cycle-warns-leading-nonprofit-sector-strategist.html "Invest In Infrastructure To Escape The ‘Starvation Cycle’, Warns Leading Nonprofit Sector Strategist"), ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN “There isn’t clear and convincing evidence that [inflation is slowing](https://www.financedigest.com/spains-12-month-inflation-slows-down-again-in-december-to-5-8.html "Spain’s 12-month inflation slows down again in December to 5.8%") or that the labor market is cooling. There may be some hints that job hiring is slowing. The diffusion indexes ticked down showing that the job gains aren’t as broad as they used to be.” (Compliled by the [global Finance](https://www.financedigest.com/open-finance-the-next-step-for-global-digital-transformation.html "Open finance – the next step for global digital transformation") & Markets Breaking News team) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---