U.S. Outlook: The labor market is hot. Is it getting too hot?
The May jobs report revealed impressive strength and breadth in U.S. job creation that blew away most economists’ expectations.
Employers added 223K non-farm jobs in May — a big step up from April’s 159K gain.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on June 1.Key observations:
- If you remember only one number from today’s report, it ought to be 3.8%, which is the unemployment rate for May and the lowest in 18 years.
- This labor market tightness is gradually moving the needle on national wage growth, too.
- From the Fed’s perspective, we are absorbing labor market slack at an impressive pace that is not sustainable without fueling a jump in wage and price growth if it continues in the months ahead.
- The probability of four rate hikes in 2018 would be a lot higher today if it weren’t for the downside risks in the second half of the year from an escalating trade war.