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The U.S. economy added 172,000 nonfarm payroll jobs in May, significantly exceeding the consensus estimate of 88,000 and the whisper number of 99,000.
Following the May jobs report, traders are fully pricing in a quarter-point Federal Reserve rate hike by the end of the year.
The U.S. unemployment rate held steady at 4.3% in May, in line with expectations.
Average hourly earnings in the U.S. increased by 3.4% in May, which was in line with estimates.
Wage growth of 3.4% in May is not keeping pace with the current inflation rate of 3.8%.
The U.S. underemployment rate declined from 8.2% to 8.1% in May.
Claudia Sahm believes the May jobs report is not a worrisome print for the Federal Reserve because wage growth remains moderate and is slowing.
Claudia Sahm does not believe the recent strong jobs numbers will be revised down, citing Cleveland Fed research indicating that recent downward revisions were not anomalies that broke survey models.
Administrative data suggests there might be an upward revision to U.S. jobs numbers next year.
The consensus forecast for the upcoming CPI print is for 4.2% growth.
Kevin Gordon notes a divergence in equity market breadth, with the percentage of companies outperforming the S&P 500 on a rolling 3-month basis remaining weak.
The last time the percentage of companies outperforming the S&P 500 on a rolling 3-month basis was below 23% was in 2023 and 2024; prior to that, it was 1973.