The U.S. economy added 272,000 jobs last month and wage growth ticking up, reversing a three-month downward trend.
But the jobs report also leaves the timing of much-anticipated interest rate cuts in limbo ahead of next week’s meeting of the Federal Reserve’s rate setting committee.
Hopes for lifting the national economic mood rest in part on the timing of interest rate cuts, which would decrease borrowing costs, stimulate the economy and please investors.
“Heading into next week’s [Fed] meeting, robust job creation and firmer wage growth will likely reinforce policymaker’s backward-looking hawkish bias,” EY economist Lydia Boussour wrote in a commentary Friday.
“The risks of a delayed onset [of the easing cycle] in September are growing.”
Discrepancies between the Labor Department’s household and establishment surveys, the data sources for the monthly jobs report, also suggest conditions for workers are not as strong as they appear.
Although the establishment survey of employers reported 272,000 new jobs in May, the household survey showed that the number of employed people in the economy dropped by 408,000.
Other factors are at play in such disparities, including the number of people retiring and response rates to the surveys themselves, but economists watching the national mood say the discrepancies are still notable.
“I think the divergence between the employer survey and the worker survey goes a long way to explaining this ‘vibecession’ – while the economy looks good on paper, real people are still not entirely feeling it,” Michele Evermore, a former Biden Department of Labor official, wrote in an analysis.
The Hill’s Tobias Burns has more here.
