US May 2019 non-farm payrolls report highlights:
- Prior was +263K (revised to +224K)
- March was +196K (revised to +153K)
- Estimates ranged from 80K to 228K
- Two month net revision -75K
- Unemployment rate 3.6% vs 3.6% expected
- Participation rate 62.8% vs 62.8% prior
- Avg hourly earnings +0.2% vs +0.3% exp
- Avg hourly earnings +3.1% y/y vs +3.2% exp
- Avg weekly hours 34.4 vs 34.5 exp
- Private payrolls +90K vs +174K exp
- Gov't -15K
- Manufacturing +3K vs +4K prior
- U6 underemployment 7.1% vs 7.3%
The household survey looks to be stronger than the establishment survey but the market doesn't care on the kneejerk with the US dollar getting beaten up.
The softness in earnings compounds the weakness but unemployment still remains low. However with the soft jobs growth and revisions, you have to wonder if the Fed is getting worries.
The missing link for a Fed cut is softness in economic data. As the chart shows, this is the weakest 4-month period of jobs growth since 2012 so there's definitely a dose of softness. June is still off the table but the market will be looking for a sign that July is in play and if the data continues to soften between now and July the the Fed will cut.
