Healthcare Provides Majority Of Employment In May

The unexpected rate of wage and job growth in May strengthened the belief that the Federal Reserve will continue to hold its current policy of rate hikes through this summer and possibly beyond.

Non- Farm Jobs

Non-farm payrolls rose by 272,000 for the month, according to data released by the Bureau of Labor Statistics on Friday. This figure is significantly higher than the Wall Street consensus of 190,000 and much higher than the relatively modest gain of 165,000 in April. Furthermore, average hourly earnings increased by 4.1 per cent over the previous year, which was higher than anticipated.

Thriving Industries

With 83,000 new jobs created last month, social assistance and health care once again took the lead. There were additional 42,000 in leisure and hospitality, which includes bars and restaurants, and 33,000 in professional and business services.

With only 7,000 new jobs added in April, the public sector, which has been responsible for the majority of recent payroll, rebounded with gains of 43,000.

Fed Interest Rate

Beyond indicating that the labor market is still thriving, the data at the very least supports the idea that the Fed does not need to act quickly to cut interest rates.

Few indicators point to higher rates posing a threat to broad measures of economic growth as long as inflation remains above the central bank’s 2 per cent target.

Fed’s Dual Mandate

The ‘dual mandate’ of the Federal Reserve calls for preserving both price stability and full employment. Despite the increase in unemployment to 4 percent in May 2024.

On the other hand, inflation is still significantly higher than the Fed’s target on the other side of the mandate. The majority of gauges show that prices are rising at a rate of roughly 3 per cent per year, which is still quite high but much lower than the mid-2022 peaks.

Published on: Saturday, June 08, 2024, 10:43 AM IST