The unemployment rate in May jumped more than it has in over two decades, reaching its highest level since October 2004 and emphasizing the recessionary risk the U.S. economy is currently facing. The civilian unemployment rate spiked to 5.5 percent from 5.0 percent in April, coming in much worse than the expectation of 5.1 percent. The last time the unemployment rate jumped half a percentage point was February 1985. With nearly 49,000 jobs cut from payrolls following decreases of 28,000 in April and 88,000 in March, May marked the fifth consecutive month of job losses. Overall, the economy has shed 324,000 jobs this year.
The latest decrease was led by declines in construction, professional & business services, retail trade, and manufacturing. Revisions to March and April resulted in a net revision downward of 15,000. On the inflation front, average hourly earnings advanced 0.3 percent in May, coming in above the market projection for a 0.2 percent boost.
With widespread payroll losses, the May non-farm report clearly portrayed further deterioration in the labor sector, lessening the ability of the consumer to support economic growth. The jump in unemployment may very well have been exaggerated for technical reasons such as graduating college students attempting to enter the labor market, but nevertheless points to weakening in employment. May's report has also put the Fed in a tough situation by lowering the odds of a healthy rebound in economic growth later this year. Treasury yields fell on the news and equities fell under downward pressure.
For week ending June 21, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 384,000, unchanged from the previous week's revised figure of 384,000. They also reported a four-week moving average of 378,250, an increase of 2,250 from the previous week's revised average of 376,000.
What is the non-farm payroll report?
Of all the world monthly economic reports, the monthly US NFP report is the most highly anticipated and has the most dramatic impact on the currency market.
The report, which is released on the first Friday of each month and states the previous month's numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.
What's more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the US economy and interest rates translate to the strength or weakness of the US dollar.
The latest decrease was led by declines in construction, professional & business services, retail trade, and manufacturing. Revisions to March and April resulted in a net revision downward of 15,000. On the inflation front, average hourly earnings advanced 0.3 percent in May, coming in above the market projection for a 0.2 percent boost.
With widespread payroll losses, the May non-farm report clearly portrayed further deterioration in the labor sector, lessening the ability of the consumer to support economic growth. The jump in unemployment may very well have been exaggerated for technical reasons such as graduating college students attempting to enter the labor market, but nevertheless points to weakening in employment. May's report has also put the Fed in a tough situation by lowering the odds of a healthy rebound in economic growth later this year. Treasury yields fell on the news and equities fell under downward pressure.
For week ending June 21, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 384,000, unchanged from the previous week's revised figure of 384,000. They also reported a four-week moving average of 378,250, an increase of 2,250 from the previous week's revised average of 376,000.
What is the non-farm payroll report?
Of all the world monthly economic reports, the monthly US NFP report is the most highly anticipated and has the most dramatic impact on the currency market.
The report, which is released on the first Friday of each month and states the previous month's numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.
What's more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the US economy and interest rates translate to the strength or weakness of the US dollar.
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