U.S. Payrolls Surge 431K, Jobless Rate Falls to 9.7%
Posted 06-04-2010 at 10:55 AM by DailyFX
The U.S. economy added 431,000 jobs in May, much lower than economists’ expectations of 536,000, while the unemployment rate fell to 9.7 percent from 9.9 percent the previous month. As widely known, the jump in payrolls was largely attributed by government employment, whereas the private payrolls added merely 41,000 of the 431,000 gain.
Breakdown
Looking at the breakdown of the report, Americans dropped out of the labor force in May as the labor pool available slid from 21,211 to 20,707, while census workers jumped 411,000, slightly above our forecasts for a 400,000 increase. Indeed, the continuation of federal hiring may continue to weigh on the outlook for payroll figures as the unwinding of census workers in the near future will likely distort figures. Specifically, from the week beginning April 10th to the week ending May 22nd, the number of temporary 2010 census workers paid weekly has soared from 127,412 to 549,450.
Despite the weakness in the private sector, figures showed that average hourly earnings climbed 0.3 percent in May after rising a revised 0.1 percent the previous month, while annualized figures illustrated a 1.9 percent advancement. All in all, this converts to approximately 2.3 percent growth over the past 12 months, which is still indicative of a downward trend.
Going forward, the central bank is forecasting that the unemployment rate will fall back to 9.60 percent this year and tumble to 8.35 percent in 2011. In terms of rates, investors are weighing in a zero percent chance that the Federal Reserve will raise borrowing costs twenty five basis points at its next rate decision meeting on June 23rd as Americans who dropped out of the workforce continue their job hunt, while households face tightening lending standards.
Breakdown
Looking at the breakdown of the report, Americans dropped out of the labor force in May as the labor pool available slid from 21,211 to 20,707, while census workers jumped 411,000, slightly above our forecasts for a 400,000 increase. Indeed, the continuation of federal hiring may continue to weigh on the outlook for payroll figures as the unwinding of census workers in the near future will likely distort figures. Specifically, from the week beginning April 10th to the week ending May 22nd, the number of temporary 2010 census workers paid weekly has soared from 127,412 to 549,450.
Despite the weakness in the private sector, figures showed that average hourly earnings climbed 0.3 percent in May after rising a revised 0.1 percent the previous month, while annualized figures illustrated a 1.9 percent advancement. All in all, this converts to approximately 2.3 percent growth over the past 12 months, which is still indicative of a downward trend.
Going forward, the central bank is forecasting that the unemployment rate will fall back to 9.60 percent this year and tumble to 8.35 percent in 2011. In terms of rates, investors are weighing in a zero percent chance that the Federal Reserve will raise borrowing costs twenty five basis points at its next rate decision meeting on June 23rd as Americans who dropped out of the workforce continue their job hunt, while households face tightening lending standards.
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