U.S. nonfarm payrolls rose in May, jobless rate falls to 3.8 pct

The U.S. employment report for the month of May came in slightly above expectations. The nonfarm payrolls rose 223k, as compared with expectations of a rise of 200k. Goods sector added 47k jobs, stimulated by another month of strong job gains in construction and manufacturing. Meanwhile, services sector added 171k on the month.

There was widespread strength on several services, including business services, education and health, leisure and hospitality, and retail. Strength in retail employment is not expected to be maintained, but it contributed to the solid tone of the overall report, noted Barclays in a research report. Meanwhile, the jobless rate dropped to 3.8 percent, consistent with the forecast, and the underemployment rate also fell by two-tenths to 7.6 percent.

“We continue to believe the unemployment rate will drift lower over time and our forecast calls for a 3.0 percent unemployment rate at the end of 2019, well below FOMC estimates of NAIRU”, stated Barclays.

Average hourly earnings rose 0.3 percent sequentially and 2.7 percent year-on-year, each was one-tenth above our forecast. Hours worked remained stable at 34.5.

“We see this report as consistent with the Fed’s optimistic view on the near-term outlook for the US economy and another 25bp increase in the federal funds rate in June and, more broadly, the desire to normalize its policy stance gradually”, added Barclays. 

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -5.49164. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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