The US jobs report for May beating forecasts in terms of non-farm payrolls growing much higher than expected by 172,000.
The unemployment rate staying steady at 4.3%.
And after yesterday's new record close for the Dow industrials, we are looking at Dow futures set to gain ahead of the open.
Well joining me on this Friday morning to weigh in on the latest report is Mark Hamrick, senior economic analyst for Bankrate.
So Mark, good morning.
Happy Friday.
We finally got that May jobs report and all of us have had about an hour to digest the details.
So what would you say are the key takeaways from the latest report here.
Good to see you.
Good morning, Remy.
Sometimes when we get an economic report, I feel guilty for smiling.
I don't feel guilty for smiling after this May employment report because, as you said, it came in better than expected and there were some good things about it.
There are some things about it that point to suboptimal conditions.
So let's talk about the good things.
172,000 jobs added.
That's much higher than the consensus.
There were a couple of economists who thought we might have an upside surprise.
I saw one who thought we might have a downside surprise.
So the good news is we had a surprise and it was positive.
The other part is that unlike some months we've had over the past year or so, the revisions we had this time were also to the upside.
So we added an additional 93,000 jobs for the months of April and March.
And so all taken together.
You're in a better place with employment than you might have thought we were just an hour ago.
Unemployment rate is steady.
That's obviously if not a solid victory, at least it's a tie.
And then the other part of this that is suboptimal is the wage growth component, at least from a worker compensation standpoint.
We have average hourly earnings up 3.4% over the past year.
We know that's 40 basis points below where.
The consumer price index has been, so worker pay is not keeping up with the surge in prices, affordability being among the chief concerns among Americans and voters in this midterm year.
And then finally, I would say we're still a bit lopsided in the jobs creation sector participation part of this health care, social assistance, leisure and hospitality, and local government doing all of the heavy lifting here, and financial activities actually saw a decline, which is not what you want to see.
Yes, and Mark, I'm glad you mentioned that because when we take a look at other labor market data, especially data that came out this week alongside the I in manufacturing figures, there are mixed signals.
And when we look at real incomes, they're actually lower over the last year when you adjust for inflation, and most Americans out there, most workers are losing purchasing power in this case-shaped economy.
So how long before the consumer spending hits the wall?
I think you're already seeing some of that.
That's why.
We hear CEOs all the time talking about, you know, their well-heeled consumers doing well and those who don't have substantial assets or liquidity not doing so well.
We had the Macy's earnings report as kind of a poster child for that this week.
What did they say?
They said Blue Mercury and Bloomingdale's were doing fine, but the main part of the department store business was struggling, and you know we can see how we get to that.
It's the same thing we hear from airlines.
CEOs where they say the front of the plane is selling well, the back of the plane, not so much the front of the plane is where the price of your tickets are.
So if you're fortunate enough to possess substantial assets, have a high income, then you are not sweating as much as those who do not.
And in this environment where inflation's been given a new lease on life because of the war with Iran, this is going to be an issue which is going to stick with us for quite some time, which of course then leads into the interest rate outlook.
Yes, Mark, before I let you go, I do want to ask you about Fed rate expectations.
What can we expect from the Federal Reserve this year into next?
Right now we have to acknowledge the risk of a rate increase is higher than the risk of a rate cut.
Financial markets are trying to account for that, and we're just about 2 weeks away from the new chairman Kevin Warsh's first news conference.
That is going to be interesting.
Well Mark, as you can hear behind me, that is the opening bell here at the New York Stock Exchange, so we will have to leave it there.
So thank you so much for joining me today.
I appreciate your time as well as all of your insights.
Thank you.
