JUNE 4, 2018 – MAY PAYROLLS STRONG; UNEMPLOYMENT RATE AT 18-YEAR LOW
Last month, the U.S. economy added 223,000 jobs, dropping the unemployment rate to an 18-year low of 3.8 percent. Economists were expecting payroll growth of 188,000 and for the jobless rate to hold steady at 3.9 percent. Average hourly earnings rose by 8 cents, which is helping to push average wage growth up to 2.7 percent over the past year.
Wage growth last month was up slightly, at 2.7 percent, from the 2.6 percent seen in the past three months. The Fed’s focus has been on labor scarcity-induced wage pressure which is failing to materialize at a strong pace. Wage growth is seen to be an inflation stimulator.
Regardless, this jobs report will support a June rate hike by the Fed. The probability of a June hike stands at 94 percent, the one in September at 73 percent and a fourth hike in December at 37 percent, according to the CME. If you act quickly, there is still time to lock into current interest rate using a swap before the scheduled June 12-13 Fed meeting.