WASHINGTON– According to the government, in an apparent contradiction, job creation was greater than expected in May in the United States, while unemployment increased and reached 4%.
As the election approaches, data from Joe Biden’s administration appears more inconsistent.
In the United States, 272,000 jobs were added last month, up from 165,000 in April, while the unemployment rate rose from 3.9% to 4.0%, according to the Department of Labor.
The figure given by the Biden administration on job creation is above the 185,000 positions expected by analysts, according to the consensus gathered by Briefing.com. It is also, according to the report, the highest volume of this indicator since December 2023.
At this time, the Federal Reserve’s reference interest rates are at their highest levels in more than two decades to make loans more expensive with the intention that consumption continues to decline and prices fall.
For this reason, the employment data is not good news for the market.
In a first reaction to the report, the New York Stock Exchange fell at the opening on Friday, interpreting that the possibility of an interest rate cut by the Fed is becoming increasingly distant.
The central bank will have its monetary policy meeting next Tuesday and Wednesday, and the market expects it to keep interest rates at the same level, which is quite high.
The Federal Reserve remains against the wall
“This mixed report will complicate the Fed’s job,” said Julia Pollack, chief economist at job platform ZipRecruiter.
“Fed members and investors expected a less forceful report, which would have increased confidence in the possibility of (rate) cuts in July or September,” he reflected.
A buoyant labor market keeps inflation buoyant and delays Fed (interest rate) cuts until later this year or next year,” Nationwide Chief Economist Kathy Bostjancic agreed.
It also allows consumption to be sustained despite expensive credit, another element that puts upward pressure on prices.
In fact, hourly income rose 0.4% between April and May, while the increase in 12 months is 4.1%, similar to the figure of recent months, and above inflation.
According to the government, inflation data in April showed that it remained stable in the 12-month measurement, after an alleged rebound at the beginning of the year.
However, economists and American consumers are nowhere to see the notable reduction in inflation that the administration refers to.
The PCE inflation index, the one preferred by the US central bank published last week, showed a price increase of 2.7% in 12 months and 0.3% compared to March.
Source: With information from AFP.
