Trump breaks protocol
RATE FALLS TO 3.8% FROM 3.9% TO MATCH APRIL 2000 AS THE LOWEST SINCE 1969
President Donald Trump yesterday broke with decades of protocol and commented publicly about the highly anticipated jobs report data 69 minutes before they were released by the Bureau of Labor Statistics. Treasury yields moved sharply higher within seconds of a tweet from Trump that said he was “looking forward to seeing the employment numbers at 8:30 this morning.”
US hiring rose more than forecast in May, wages picked up and the unemployment rate matched the lowest in almost five decades, indicating the strong labour market will keep powering economic growth.
Payrolls increased 223,000 following a revised 159,000 gain, Labour Department figures showed yesterday. The median estimate of analysts surveyed by Bloomberg called for 190,000 jobs. Average hourly earnings increased 2.7 per cent from a year earlier, more than projected, while the jobless rate fell to 3.8 per cent from 3.9 per cent to match April 2000 as the lowest since 1969.
The report reinforces expectations for Fed policymakers to raise interest rates when they meet on June 12-13, and may spur bets on two more hikes this year after that, rather than one. Steady hiring and lower taxes will bolster consumer spending, helping to support the projected rebound in US growth this quarter and continuing to trim the unemployment rate. Wage gains, while positive in the latest report, have yet to show a sustained acceleration.
“The job market is red hot,” Ryan Sweet, an economist at Moody’s Analytics Inc in West Chester, Pennsylvania, said before the report. Still, “it’s only going to get harder to find workers. We’ll see trend job growth begin to cool.” President Donald Trump tweeted an hour before yesterday’s release that he was “looking forward to seeing” the figures, spurring market speculation that the report would be upbeat, and it was. In addition to payrolls topping economists’ forecasts, the unemployment rate had been projected to remain at 3.9 per cent, while wage gains exceeded estimates for 2.6 per cent.
The jobless rate fell further below Fed estimates of levels sustainable in the long run, a potential source of upward pressure on wages and inflation, according to some economists.
Inflation
The fiscal boost from the Republican-backed tax cuts may also boost inflation at a time when the economy is near full employment, while a protracted trade war, sparked by Trump administration tariffs, would pose a growth risk. Revisions to prior reports added a total of 15,000 jobs to payrolls in the previous two months, according to the figures, resulting in a threemonth average of 179,000.
Economists estimate that monthly payroll gains of less than 100,000 are sufficient to keep pushing down the unemployment rate, which is derived from a separate Labour Department survey of households.