Economic Commentary

Economic Commentary

June 7, 2024

Job growth not cooler or weak in May, keeping the Fed in a holding pattern for longer

Executive summary

U.S. payrolls added 272,000 jobs in May, well above the consensus expectations of 180,000. There were downward revisions lowering the prior two months by 15,000; still, the six-month average increased to 254,800.

It’s hard to see much cooling within the May employment report, especially compared to April, making April’s softness appear out-of-step with the longer trend. The exception is the unemployment rate, which ticked up to 4.0%, but it’s still well below what is considered full employment. On a year-over-year basis, though, most labor metrics are cooler than 2023 as the unemployment rate rose, while average hourly earnings and hours worked slipped. That said, the economy isn’t weak as it continues to create roughly 75,000 more jobs per month compared to the pre-pandemic pace of 177,000.

Based solely on a solid labor market, the U.S. economy doesn’t appear to need interest rate cuts to maintain growth in the near term. That supports the Federal Reserve (Fed) holding rates steady for a while longer. Still, given where key components such as housing are trending, we believe that progress on inflation should allow for at least one rate cut before the end of the year.

Ultimately, the resilient labor market reflects a solid, albeit cooling, U.S. economy. That validates the Federal Reserve (Fed) remaining in a holding pattern. Alas, pushing rate cuts out further this year has frustrated markets. Still, given where key components such as housing are trending, we believe that progress on inflation should allow for at least one rate cut before the end of the year.

Our full report is reserved for clients only. Let’s work together.

A caring advisor can help you uncover opportunities and take on challenges—and provide greater confidence, clarity, simplicity, and direction.

The latest research & insights Related resources

    {0}
    {6}
    {7}
    {8}
    {9}
    {12}
    {10}
    {11}

    {3}

    {1}
    {2}
    {7}
    {8}
    {9}
    {10}
    {11}
    {14}
    {12}
    {13}