Hicks: Jobs Report Not Enough to Lead to Rate Cuts

Hicks: Jobs Report Not Enough to Lead to Rate Cuts

The figure could also dramatically impact the Fed's current thinking as it debates about whether to lower interest rates, with market expectations for a rate cut in June rising to 27.5% from 16.7% after the data was released.

Last month's modest job growth followed a much healthier gain of 224,000 in April. Manufacturing has been particularly weak over the past several months, and measures of business confidence in the sector have reached cycle lows as President Donald Trump threatens new tariffs on Mexico.

"Seventy-five thousand net new jobs in May is not as strong as in prior months, but nonetheless implies continued economic expansion and solid consumer confidence", Yun said.

That may happen as soon as this month, when the Fed's interest rate-setting panel, the Federal Open Market Committee, convenes its next meeting June 18-19. The human resources and payroll firm reported just 129,000 new jobs for March - a figure that was crushed two days later when the Labor Department reported an addition of nearly 200,000 jobs.

On the other hand, the BLS slashed its job growth estimated for March and April by 75,000 in total, bringing the 12-month average growth to 196,000 a month-the first time it dropped below 200,000 since April 2018. A separate report from the Fed showed that factory output fell 0.5 per cent in April. "We are closely monitoring the implications of these developments for the USA economic outlook and, as always, we will act as appropriate to sustain the expansion".

Larry Adam, chief investment officer at Raymond James, said that the Dow Jones will be more influenced by the US-Mexico trade talks than the Fed reducing interest rates.

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Meanwhile, average hourly wages rose 0.2 percent compared to April to 27.83 US dollars, disappointing economists who had hoped for slightly stronger gains.

Many business leaders and trade executives have spoken out in opposition to the tariffs, which can lead to increased costs for consumers, disruption in supply chains and a subsequently weaker USA economy.

The U.S. government under Trump has levied a 25% tariffs on Chinese imports, throwing global trade a curveball. The job gains in May were the fewest since February.

The average hourly wage grew 3.1% in the past year, above the cost of living but well below the 4% growth experienced during the economic boom of the late 1990s.

We got some sobering news today about the USA job market. The stock market is clearly anticipating a rate cut sometime in the near future, and that's contributed to the big rally we've seen on Wall Street this week.

Ford Motor Co. said last month that it was cutting 7,000 white-collar jobs - about 10 per cent of its salaried workforce - as part of preparations for an industry driven more by electric and autonomous vehicles.