Latest / Markets with Megan: A Quick Financial Markets Update / The Hidden Story Behind May's Jobs Numbers | Episode 142 | 06-07-24

Transcript

The Hidden Story Behind May's Jobs Numbers | Episode 142 | 06-07-24 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: Well, this morning we got a super mixed jobs report.
• 0:04
  Megan Horneman: When we look at the payroll report for the month of May, not too great for those that are expecting rate cuts imminently, though.
• 0:11
  Megan Horneman: This is Markets with Megan.
• 0:13
  Megan Horneman: It's Friday, june 7th, and we are here to discuss the monthly jobs report that we got this morning.
• 0:18
  Megan Horneman: This is one of the most important economic pieces of data that we get every month.
• 0:22
  Megan Horneman: It comes the first Friday of each month, and the US economy added more jobs than was expected.
• 0:28
  Megan Horneman: They added 272,000 jobs.
• 0:31
  Megan Horneman: The expectation was 180,000.
• 0:34
  Megan Horneman: What we saw was, though, the jobs were primarily led in the goods producing sector construction, professional business services, leisure and hospitality, and government, so it was actually pretty widespread on where we saw job gains.
• 0:47
  Megan Horneman: But on the flip side of it, we saw the unemployment rate rise unexpectedly to a two-year high, and that's because we saw a 408,000 decline in the household employment, so that caused the unemployment rate to actually increase What does all this mean?
• 1:03
  Megan Horneman: The other important component of this report was the average hourly earnings.
• 1:08
  Megan Horneman: They increased more than expected up 0.4% for the month of May and up 4.1% on a year-over-year basis.
• 1:16
  Megan Horneman: That's resulted in the expectations for Fed rate cuts getting pushed out.
• 1:20
  Megan Horneman: Why is that?
• 1:21
  Megan Horneman: Because the Fed has often talked about wage pressures and what wage pressures do is if you make more money, you'll spend more money.
• 1:28
  Megan Horneman: What does that mean?
• 1:29
  Megan Horneman: Inflation.
• 1:30
  Megan Horneman: So that's what the Fed's been focusing on.
• 1:32
  Megan Horneman: That's why we're seeing today the equities have been relatively muted.
• 1:36
  Megan Horneman: Not much movement in the equity market.
• 1:38
  Megan Horneman: They were up for a bit because of the strong payroll jobs, but now we're kind of losing some of those gains.
• 1:44
  Megan Horneman: Relatively muted on the equity side, but on the bond side we're seeing long-term yields, short-term yields, rising significantly on this report.
• 1:52
  Megan Horneman: That's because the Fed rate cuts are being pushed out again.
• 1:56
  Megan Horneman: We keep having this seesaw back and forth about when the Fed's going to cut rates.
• 1:59
  Megan Horneman: Our view is rate cuts are not until the end of this year at the very earliest.
• 2:04
  Megan Horneman: Our view is rate cuts are not until the end of this year at the very earliest, beginning of next year most likely.
• 2:07
  Megan Horneman: And the only change to that would be if we saw some dramatic fall off in economic growth, which right now we're seeing that the labor market is showing some signs of cracking but not enough to get inflation down.
• 2:20
  Megan Horneman: So not enough evidence for the Fed to say, yeah, rate cuts are right around the corner.
• 2:23
  Megan Horneman: We'll be back next week.
• 2:29
  Megan Horneman: Lots more economic data to discuss and market movements.
• 2:30
  Megan Horneman: If you have any questions or comments, please feel free to reach out to podcasts at burdenscom.
• 2:32
  Megan Horneman: Thank you,