US Payrolls Report: Unstoppable Economic Resilience Amidst Slowing Growth - What's Next?

US payrolls (May) – 02/06

The resilience of the US economy continues to manifest itself in the jobs data, despite concerns that a slowing economy will start to see jobs growth falter. While the monthly payrolls numbers have been slowing in terms of the numbers of jobs being added on a monthly basis, economists have consistently underestimated the resilience of the labour market over the last few months, even with the recent turmoil in the banking sector hitting business and consumer confidence.

 

The last few months have seen the headline numbers consistently beat forecasts, with the April jobs numbers no different in this regard, with 253k jobs added, while the unemployment rate fell to 3.4%. Wages growth also edged up to 4.4%.

 

There was a downside in a negative -149k adjustment to the previous 2 months, which took some of the gloss over the broader numbers, but they don't support the idea that the US economy is struggling, particularly when there are still over 9.5m vacancies, although this number has declined by more than 2m since the peaks of March last year.

 

Nonetheless the number of vacancies remains eye-wateringly high and well above the levels before the pandemic. The participation rate has also been rising and is at its highest level since before the pandemic at 62.6%. ADP payrolls have also remained solid, rising by 269k in April while weekly jobless claims have remained steady, only modestly increasing from the levels we were seeing in March.

 

This week's jobs numbers are expected to see 180k jobs added, and for the unemployment rate to edge higher to 3.5%.

 

By Michael Hewson (Chief Market Analyst at CMC Markets UK)