The job market in the United States resists everything. Its endurance defies the laws of gravity, it is more than proven and breaks with the supposed cooling of the economy due to the harsh containment policy of the Federal Reserve (Fed) to tame inflation.
Its strength, focused above all on the service sector and professional positions, is such that forecasters are not even close to getting it right. All forecasts ensured that no more than 190,000 jobs had been created in May. The official report indicated that 339,000 occupations were added last month.
However, the unemployment rate stood at 3.7%, instead of the forecast 3.5% and 3.4% in April, a percentage barely above that of 1969, the time before all the crises. The labor force was stable in May at 62.6%.
Apart from pulverizing the omens, this figure means the 29th consecutive month of job creation, despite the ten times in a row that the Fed has raised the price of money since March 2022, which has led to some interest rates at zero or almost has gone to 5-5.25%.
This effort to slow growth has also had no effect on wages, which rose 0.3% an hour last month, putting the annualized value at a 4.3% increase in payrolls.
The stock market reacted positively, with an initial rise of 200 points in the Dow Jones. In addition to the good labor data, investors responded with optimism to the agreement to raise the debt ceiling and avoid the suspension of payments by the federal administration. President Joe Biden hangs more medals with his calm style, without insults or threats.
The jobs created in May exceed those of April, 294,000 after a review, and it was said that the expected setback would show that the economic slowdown had also reached the labor market. But this data reflects that it is still “hot”, and that the attraction of jobs resists the rise in rates and even economic uncertainties, with numerous technology companies applying massive layoffs and a relevant setback in the real estate sector.
This keeps consumer demand strong, one of the key elements that the Fed is seeking to water down, to no avail so far, to cool commodity prices and is a factor that negates any confirmation of signs of a recession. glimpsed on the horizon.
This data comes on the eve of the Federal Reserve holding its two-day meeting next week. Its chairman Jerome Powell expressed the view of most central bank leaders that this time around there would be a pause in rate hikes.
But doubts are now being raised as inflation remains high and concerns linger that prices will rise further on the back of this strong job market and strong consumer demand. Some analysts glimpse that Fed officials can conceive the idea that a point "beyond sustainable unemployment" has been reached.
If employment grew more slowly and in less quantity, that would help to reduce salary pressure and inflationary pressure, although, more than a year after applying that severity recipe, the labor market shows no sign of containment.
