6 Economists React To Robust Jobs Report: Is The Fed Hiking In June?

The U.S. labor market is hot, beating all forecasts in May and recording its strongest performance in recent months. Nonfarm payrolls came in at 339,000 — far surpassing the expected 190,000 — it seems the labor market isn’t showing any signs of weakness.

Investors now have one primary question in mind: are we getting a rate hike at the Fed’s next meeting?

Among the surprises in May’s jobs data was the unemployment rate jumping from 3.4% to 3.7%, above forecasts of a slight increase to 3.5%.

On the other hand, average hourly wages grew by 0.3% month-on-month, meeting expectations despite a slowdown from April’s gain of 0.4%. However, annual wage growth fell short at 4.3%, unable to reach expectations or match April’s 4.4% figure.

What do the economists think? We've got six who provided comments on the jobs report:

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Quincy Krosby, chief global strategist for LPL Financial, said despite a stronger headline number, the futures market remains positive. Observing the higher tick in the unemployment rate, Krosby believes the Fed is indicating that a June 14 rate hike is unlikely, as they prefer to monitor financial conditions.

Brad McMillan and Peter Essele of Commonwealth Financial Network: McMillan, the chief investment officer, found the jobs data surprisingly strong and suggests it could increase the odds of the Fed raising rates at the next meeting.

Essele, the head of portfolio management, also saw the result as falling well within the Fed’s playbook, indicating a continuously growing economy coupled with moderating wage inflation.

Jamie Cox, managing partner for Harris Financial Group, said the strong jobs number negates any near-term recession concerns. He highlighted an odd discrepancy between the Household Survey and the posted BLS numbers and said that, for now, the strong labor market isn’t likely to cause the Fed to pause.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said the increased unemployment rate is potentially useful for indicating a “weakening” labor market but cautioned that it could also reflect increased confidence in jobseekers.

Jeffrey Roach, chief economist for LPL Financial, noted the hot job market in May, but highlighted that it isn’t the main factor contributing to the ongoing inflationary pressures. Roach expects the Fed to likely pause later this month, focusing on the delayed effects of previous rate hikes.

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