US non-farm payrolls up by only 75,000 in May
May US non-farm payrolls fell below economists' predictions.
US non-farm payrolls grew by 75,000, according to the US Department of Labour. That statistic falls far below April’s employment report of 263,000 new positions. Economists expected 185,000 jobs to be added in May.
US non-farm payrolls: key figures
|Professional and business services||+33,000|
Where did non-farm payrolls grow in May?
Professional and business services added 33,000 new jobs. The healthcare industry added 16,000 new positions. Manufacturing jobs only increased by 3000, a likely consequence of businesses being caught in the middle of the US-China tariff war. Retail lost 7600 positions as brick and mortar stores struggle with declining sales.
What are economists saying about May non-farm payrolls?
Charlie Ripley, senior investment strategist for Allianz Investment Management, believes that the latest job report shows that the booming economy is finally slowing down.
‘While much of the attention from investors has been focused on trade disputes and the potential for a slowing economy, today’s disappointing employment report provides further evidence that the end of the business cycle is upon us and economic activity is slowing,’ said Ripley.
While some economists expressed pessimism about May's non-farm payrolls, there was still positive news. The unemployment rate is still low at 3.6%. Brian Coulton, economist at Fitch Ratings, believes that the US economy is still robust.
‘While the slight decline in wage growth will support the [US Federal Reserve’s] patient stance on rates, the average pace of job growth over the last three months (at 151,000) is hardly alarming. It speaks to a slowdown in the domestic economy, but there’s no suggestion of demand falling off a cliff,’ said Coulton.
Will disappointing non-farm payroll numbers influence the Fed?
Ian Shepherdson, chief economist at Pantheon Economics, wrote in an email to clients that the lackluster job numbers may inspire US Federal Reserve chair, Jerome Powell, to cut interest rates. Powell’s recent comments about the Fed possibly taking action to help the US economy is being interpreted as a sign of a future interest rate reduction.
‘These data make it easier for the Fed to (lower rates) either this month or next, if the trade tensions intensify and the stock market drops sharply,’ noted Shepherdson.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Non-farm payrolls report
Discover how the non-farm payrolls report affects the American markets ahead of the next announcement on 7 June 2019.
Which markets could become more volatile after the NFP report?
Why was the report introduced and what does it really tell us?
Why is the report important for traders?
Live prices on most popular markets