The US labor market continues to surprise.
Data from Bureau of Labor Statistics out Friday showed there were 339,000 jobs created in May, topping Wall Street estimates for 195,000.
This marked the 14th-straight month that job creation came in above what Wall Street economists had expected and the largest monthly increase since January.
The data sent stocks higher on Friday as investors continued to expect a pause in the Federal Reserve's interest rate hike campaign will be announced later this month.
Following this report, many Wall Street economists suggested the uptick in the unemployment rate to 3.7% and the deceleration in hourly wages — which rose 4.3% over last year compared to 4.4%
in April — as signs the Federal reserve is beginning to see the "better balance," Federal Reserve chair Jerome Powell has frequently referenced. Others, however, were shocked by the jobs numbers.
As Allianz Investment Management's Charles Ripley put it, Friday's jobs report had a "a little flavor for everyone."
Ian Shepherdson, chief economist, Pantheon Macroeconomics
"This is the strangest employment report for some time... [R]ight now the data suggest that economic growth is stronger than is indicated by most other monthly data. The downward trend in job
growth since the summer of 2021 now appears to have flattened-off, though that could change with revisions.
"As for the Fed: This is a nightmare report."
Michael Gapen, US economist, Bank of America Global Research
"Nonfarm payrolls are the elephant in the room. The strength in this metric alone means that a June hike remains on the table in the event of a very strong CPI report on June 13, even if it is not the
base case at the moment. And perhaps more important, the continued resilience of the labor market means there is still a strong case for additional hikes later in the year."
Sarah House, senior economist, Wells Fargo
"Some softening in the trend of wage growth offered additional evidence that the labor market is continuing to cool, albeit gradually."
Sarah House, senior economist, Wells Fargo
"Some softening in the trend of wage growth offered additional evidence that the labor market is continuing to cool, albeit gradually."
Steve Rick, chief economist, TruStage
"As we head into the second half of 2023, we expect a mild downturn as a result of the interest rate hikes and slower consumer spending. Despite last month's rate hike, this month’s strong report
indicates that interest rate hikes have yet to impact tight unemployment conditions."
Paul Ashworth, chief North America economist, Capital Economics
"The bigger-than-expected 339,000 increase in non-farm payroll employment in May will dominate the headlines, but the employment report was not all positive — with a big drop in the household
survey measure of employment driving the unemployment rate up to a seven-month high of 3.7% and average weekly hours worked edging down to a three-year low.
"The upshot is that the Fed can still afford to skip a rate hike in June."
