American hiring hit the skids in May.
At least, that is what their non-farm payrolls survey shows.
Other surveys (the ADP Employment Report for instance) did not signal this outcome.
Markets were expecting employment growth of +160,000. They got +38,000.
But the equities markets didn’t bat an eye. The S&P barely changed it’s track on the news.
But the bond markets did notice. UST 10yr yields dropped from 1.81% to 1.71% on the day.
And gold jumped US$35 to US$1,245/oz.
The US dollar fell, but actually only marginally. The NZ dollar rose as a consequence to 69.6 USc which is back to where it was in early May.
As surprising as the US jobs report is, it does have a history of throwing in a rogue result occasionally. The last one was in March 2015, and prior to that December 2013. Both were followed by ‘normal service resuming’.
Today’s result may signal a downward trend. Or it may not. Markets will only be convinced if it is followed up next month with a similar result. ‘Rogue’ results are never sustained two months in a row in this survey. If we do get two consecutive months of low jobs data, that will be significant and not ‘rogue’.
Today’s US survey shows:
– the unemployment rate falling to 4.7% in May from 4.9% in April
– their participation rate falling to 62.6% from 62.8%
– wages growth holding steady at +2.5% pa.
– the average hourly pay rate up to US$25.59/hr (NZ$36.80/hr)
– the average workweek unchanged at 34.4 hours
The question will be, will this result take a June Fed rate hike off the table? We only have to wait for less than two weeks to find out. The Fed reports next on Thursday, June 16.