The United States continues to create jobs at full speed. After the slowdown in April, when 165,000 jobs were created, according to the revised figure, the world’s leading economy generated 272,000 new non-agricultural jobs in May, according to the figures released this Friday by the Bureau of Labor Statistics, dependent on the Department of Commerce. The data exceeds all forecasts and further distances the prospects for interest rate cuts, although the unemployment rate has risen to 4.0%, its highest level since January 2022, when it was also at that level.
Some slowdown in job creation in recent months seemed a symptom that high interest rates were slowing economic activity somewhat, but not enough to cause a recession. Now, however, the data shows an acceleration of the labor market less than five months before the presidential elections. For now, the scenario continues to look like a soft landing, although what resists returning to its level are prices.
The figure of 272,000 non-agricultural jobs created in May exceeds analysts’ forecasts by almost 100,000 and is above the average of 232,000 monthly jobs for the last 12 months. In May, the health sector, public employment, leisure and hospitality were the most dynamic sectors, but jobs were created in the vast majority of the economy. The strength of consumption continues to be the engine of an economy and immigrants, the source of labor that allows for sustained job creation over time.
In the United States, the state of the labor market is measured through two surveys. One, carried out for companies, allows us to estimate the creation of non-agricultural employment each month and is the one most followed by investors and markets. Another, made to households, is used to calculate the unemployment rate. Sometimes the results of both are a bit contradictory. In fact, this has been happening systematically over the last year.
While the survey of companies shows these 272,000 new non-agricultural jobs, the survey of households shows 408,000 fewer employees in May. This, with a greater increase in the active population, explains why the unemployment rate has increased by one tenth to 4.0%. The contrast is greater when looking at the last 12 months. In that period, the employer survey indicates that about three million jobs have been created. On the other hand, according to the household survey, the employed population closed April at 161,083,000 people, 376,000 more jobs than a year ago.
The president of the United States, Joe Biden, had been boasting about the longest streak in decades with the unemployment rate below 4%. After 27 consecutive months, he has equaled the series of the late 1960s, in the midst of the economic boom, but has not surpassed it just a few months before the elections. Even so, the US labor market is close to full employment and there are still more job offers available than unemployed workers. The job creation figures of the current president’s term have broken records, in part thanks to the recovery from the pandemic.
Investors and analysts await the clues given by the members of the Federal Open Market Committee (FOMC) of the Federal Reserve after the meeting on June 12. In it they must update their forecasts on what the appropriate monetary policy to follow will be. The March forecasts, which still pointed to three cuts of 0.25 points until the end of the year, are now a dead letter and investors believe that there will be one or at most two rate cuts until December. Especially on this occasion it will be interesting to know not only the median, but also the distribution of the forecasts.
On the same day the 12th, the consumer price index for May is also published. After disappointing data in the first quarter, the April figure has shown some moderation in price increases. The Federal Reserve has made clear that it will not begin lowering rates until it has greater confidence that inflation is moving sustainably toward the price stability target, conventionally set at 2%.
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