The May jobs report offered more positive news for the economy—boosting the stock market into a strong morning rally.
- The U.S. Bureau of Labor Statistics released its May jobs report on Friday morning.
- 339,000 non-farm jobs were created last month, while unemployment increased to 3.7% from 3.4% in April.
- May marks the 14th consecutive month of job creation exceeding analysts’ expectations, Yahoo Finance reports.
- Major stock indexes rallied at the news, with the Dow Jones Industrial Average (1.5%), Nasdaq Composite Index (1%), and the S&P 500 Index (1.3%) seeing notable gains.
Why It’s Important
The U.S. economy continues to act strangely. Despite high inflation, high-interest rates, and recession fears, spending remains high and unemployment remains low. Consumers feel confident and they are spending money, which is keeping the economy more resilient than analysts would expect for an economy that has instituted 10 consecutive interest rate hikes in the past 15 months.
The Federal Reserves hikes have not gone without criticism. Fed officials, business leaders like Cathie Wood, and politicians like Senator Elizabeth Warren (D-MA) have scrutinized the central bank for its policies, fearing that continued interest-rate hikes are risking creating an artificial recession in the near future.
The recent regional banking crisis has convinced many analysts that the Fed is becoming more cautious about its impact on the economy and the negative repercussions of interest-rate hikes. The Fed is expected to make its next announcement on June 14. Still, most expect that Fed Chair Jerome Powell will back away from additional rate hikes and let the market volatility subside while the effects of the current 5% to 5.25% interest rate take effect.
“We do not believe today’s report was strong enough to meet the bar for the Fed to hike in June but raises the risk that the Fed could hike in July. While payroll numbers were undeniably strong, the FOMC will also be focused on the unemployment rate,” says Morgan Stanley economist Ellen Zetner.