Today's broadly in-line jobs report will likely provide further
fuel for this market, pushing it further into record territory. The
market's strong momentum in this otherwise seasonally weak period
has surprised many, particularly when viewed in conjunction with
the bond market's performance.
A total of 217K jobs were created in the economy, modestly ahead
of consensus estimates and what we saw from the payroll processor
ADP on Wednesday. There weren't any major revisions, with April's
blockbuster tally revised down a tad and March's numbers remaining
The private sector added 216K in May, down from 270K in April,
with the gains coming particularly strongly from professional and
business services (up +55K in April), and health (54.9K). The
construction sector added 6K jobs in May, down from 34K in April,
providing further evidence that this space is losing momentum.
Manufacturing jobs were modestly up from the April level, contrary
to what the employment sub-component of Monday's ISM survey
The unemployment rate remained unchanged at 6.3%. Average hourly
earnings increased to $24.38 from $24.33 in April, while the
average work week remained unchanged at 34.5 hours. Average
hourly earnings have gone up +2.1% over the past 12 months. The
labor force participation rate remained unchanged from April's at
62.8%. The participation rate had dropped big in April, contrary to
expectations that an improving labor market would prompt previously
discouraged workers to rejoin the labor force and start looking for
This is a good, but not a great report. Yes, the economy has
bounced back from the winter slump, but the rebound hasn't been as
robust as some of the more aggressively optimistic estimates have
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