Key facts
- The U.S. economy added 172,000 jobs in May.
- The U.S. unemployment rate remained steady at 4.3% in May.
- Annual wage growth in the U.S. slowed to 3.4% in May.
- The U.S. U6 unemployment rate fell to 8.1% in May.
- Initial jobless claims in the U.S. rose to 225,000 for the week ended May 30.
- U.S. job openings increased to 7.618 million in April.
- Canada added 87,800 jobs in May.
- Canada's unemployment rate fell to 6.6% in May.
- Italy's services PMI fell to 49.4 in May.
- U.S. factory orders excluding transportation increased by 1.3% in April.
The U.S. economy demonstrated resilience in May, adding 172,000 jobs, a figure that surpassed economists' expectations and suggests continued economic momentum. The unemployment rate held steady at 4.3%, aligning with forecasts, while the broader U6 unemployment rate saw a slight decrease to 8.1%. Annual wage growth slowed to 3.4%, and real wages remain stagnant, indicating that workers' purchasing power is not keeping pace with inflation. Despite the positive job creation numbers, concerns about inflation persist, with Fed Governor Christopher Waller emphasizing the need for inflation containment.
The robust jobs report has significantly impacted financial markets, increasing the likelihood of a Federal Reserve interest rate hike in December to approximately 68.4%. This prospect led to a sharp decline in major U.S. stock indexes, including the Dow, S&P 500, and Nasdaq, with technology shares experiencing substantial sell-offs. U.S. Treasury yields rose, pushing the 10-year yield above 4.5% and the 2-year yield to a 15-month high, while the dollar index also increased. Cryptocurrencies and gold also saw declines.
In parallel, U.S. job openings increased to 7.618 million in April, exceeding market expectations and marking the highest level since May 2024, suggesting a tightening labor market. However, hiring in April fell to 5.116 million, and initial jobless claims rose to 225,000 for the week ended May 30, the highest level in four months, though the four-week moving average remains subdued. Worker productivity growth also slowed, and male labor force participation remains near record lows.
Separately, Canada's economy added 87,800 jobs in May, significantly exceeding forecasts, and its unemployment rate fell to 6.6%. In Italy, service sector input costs hit a 40-month high, and the services PMI contracted for the third consecutive month. Global markets are also bracing for policy decisions from the ECB and RBI, alongside ongoing AI-driven tech rallies and geopolitical tensions.