Non-farm payrolls report highlights for May 2021:
- Prior was 266K (revised to 278K)
- Unemployment rate 5.8% vs 5.9% expected
- Prior unemployment rate 6.1%
- Participation rate 61.6% vs 61.8% expected (was 62.8% pre-pandemic)
- Prior participation rate 61.7%
- Underemployment rate 10.2% vs 10.4% prior
- Average hourly earnings +0.5% m/m vs +0.2% expected
- Average hourly earnings +2.0% y/y vs +1.6% expected
- Average weekly hours 34.9 vs 34.9 expected
- Two month net revision +27K
- Change in private payrolls +492K vs +610K expected
- Change in manufacturing payrolls +23K vs +25K expected
- Long-term unemployed at 3.8m vs 4.2m prior
- The employment-population
ratio, at 58.0% vs 57.9% prior (61% before pandemic)
- Full report
The drop in the unemployment rate is only because of falling labor force participation, which isn’t something you want to see. This is a disappointing number but it’s not some kind of catastrophe, it’s well within the accepted range. It’s a goldilocks number for stocks because it pushes a taper further off the table but doesn’t point to a slowdown in the economy.
That said, I would have hoped that the April-May reopening in the US economy would have led to much more than an average of +418K jobs in those two months.
The US dollar is down 25-35 pips across the board after the headlines.
The non-seasonally adjusted number was 973K. The average non-seasonally adjusted number has been 634K above the headline in the past 10 years in May.
Biden will speak about the jobs report at 10:15 am ET, just like he did last month.