JUNE 6, 2022 – JOBS REPORT COOLS, BUT IT’S NOT BAD NEWS
The US economy added 390,000 jobs in May, down from the 436,000 new jobs created in April. The number is still robust but indicates the economy might be slowing. The unemployment rate held steady at 3.6 percent. Annual wage gains slowed in May, home sales slipped to 5.9 percent year over year, and consumer spending in April grew at its slowest pace this year.
The May job gains were at the slowest pace in the last 12-months, while wages grew by 5.2 percent year over year, and down from the 5.9 percent seen in April. These are signs the labor shortage is waning as more people return to the workforce. The good news is a slowdown in the economy could lessen the pressures on inflation.
The Fed is hoping to engineer a “soft landing” for the economy as it raises rates to curb inflation, and any slowdown now is welcome. The Fed will meet again on June 14-15 when it is expected interest rates will be pushed up by another 0.5 percent.