A recruitment sign is posted in Wheeling. The US job market has continued to recover from its pandemic-related slump.
(Photo: dpa)
Washington A surprising number of jobs were created on the US labor market in May. The companies created 390,000 new jobs, as the government announced on Friday in Washington. Economists polled by Reuters had expected just 325,000.
The unemployment rate, calculated separately, remained at the previous month’s level of 3.6 percent in May – a level that should correspond to the full employment target of the central bank Fed.
“The US labor market is in top form,” said chief economist Thomas Gitzel from VP Bank. “The US labor market has also shaken off the consequences of the pandemic within two years.” The US Federal Reserve should now feel confirmed in its course of rapid interest rate increases.
The job creation trend has continued to slow down, but is still very solid, said Bastian Hepperle from the private bank Hauck Aufhäuser Lampe. “The signs of overheating on the US labor market are therefore continuing.” Because the shortage of workers is still glaring. “An unusually large number of positions cannot be filled.”
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Furthermore, the willingness to change among employees is still extremely high. “That keeps wage pressures up and encourages the US Federal Reserve to step on the brakes harder.” In mid-June, it is likely to raise interest rates by 50 basis points and follow with further rate hikes.
Average hourly wage increases slightly
In view of an inflation rate of 8.3 percent, the Federal Reserve took the largest interest rate hike in 22 years at the beginning of May and raised the key interest rate by half a point to the new range of 0.75 to 1.0 percent. Fed President Jerome Powell has signaled hikes of the same magnitude for the June and July meetings. Dirk Chlench from LBBW assumes that the interest rate will be between 2.75 and 3.00 percent at the end of the year.
On the labor market, the average hourly wage rose by 0.3 percent in April. Compared to the previous year, the increase fell from 5.5 percent to 5.2 percent.
Wages and inflation rose sharply, while growth in the second quarter should be quite decent, said VP expert Gitzel. He therefore sees no reason for restraint in the rate hike cycle. “The Fed knows this and is acting aggressively accordingly.”
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