America's robust job market continues to generate jobs at full speed. The economy added a total of 339,000 jobs in May, according to data released Friday by the Bureau of Labor Statistics. The unemployment rate has rebounded to 3.7% from 3.4% in April, which was the lowest since 1969. The much higher than expected job creation data makes it difficult for the Federal Reserve to take a breather at this month's meeting after 10 consecutive interest rate hikes. Although the decision has not been made, the market has been betting on another rise.
The strength of the labor market is much greater than the central bank would like to control inflation. The data of new jobs in May is the highest since January and another step in the almost two and a half years of uninterrupted growth of employment experienced by the world's leading power
Economists expected job creation to stand at 180,000-195,000 jobs in May and the unemployment rate to pick up one tenth to 3.5%. Other data released this week show that there are still almost twice as many vacant jobs as there are unemployed. That pushes wages and demand higher and makes it harder for the central bank to tame inflation, which stood at 4.9 percent in April, well above the Federal Reserve's 2 percent target. Once the debt ceiling crisis is over, rising prices return to focus as the most pressing problem in the US economy.
In the United States, the labor market is measured mainly with two surveys: one to companies and one to households. The first is taken as the main reference for the job creation figure and the second serves to measure the active population and the unemployment rate. Normally, they are in tune, but this month their results differ. While the survey of companies has created 339,000 jobs, that of families registers 310,000 fewer employed and 130,000 more people in the active population. This explains why the unemployment rate has increased despite the strong job creation shown by the survey of companies.
The figures published today do show, at least, that the wage price spiral is not accelerating. In May, the average hourly wage for nonfarm private sector employees rose 11 cents, or 0.3 percent, to $33.44. Over the past 12 months, the average hourly wage has risen 4.3%, compared to April's 4.4% year-on-year pace.
The last monetary policy meeting of the Federal Reserve pointed to a possible pause in rate hikes after 10 consecutive increases, both for the content of the statement, as for the press conference of its chairman, Jerome Powell, and for the minutes published later. Powell has insisted that decisions will be made meeting by meeting depending on the data that become known and that it is possible that the tightening of financial conditions derived from the banking storm will cause fewer rate hikes to be necessary.
With a week and a half to go until the next meeting, it is too early to anticipate the decision, but this week there has been an intervention by one of the governors of the Federal Reserve, Philip Jefferson, proposed as vice president of the central bank by Joe Biden, which seemed to indicate the propensity for a pause, which could be followed by a subsequent rate hike.
"The decision to keep the policy rate constant at an upcoming meeting should not be interpreted to mean that we have reached the maximum rate of this cycle. In fact, not raising rates at a future meeting would allow the Committee to have more data before making decisions on the degree of further tightening of monetary policy," he said in a speech at a financial forum.
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