Jobs Report Shows 339,000 New Hires In May, With Easing Wage Gains, Lifting ‘Soft Landing’ Bets

The U.S. economy added far more new jobs than expected last month, the Labor Department data indicated Friday, but slowing wage growth and a bump higher in the headline unemployment rate suggests that gains won’t likely alter market projections for Federal Reserve rate hikes.

The Bureau for Labor Statistics said 339,000 new jobs were created last month, the strongest rate since January and well ahead of the Wall Street consensus forecast of a 185,000 gain. Private payrolls were pegged at 283,000, the BLS said, as the unemployment rate jumped to 3.7% from the 1969 low of 3.4%.

The BLS also revised its April jobs-addition estimate higher, to 294,000 from its original estimate of a 253,000 net gain, while lifting its March estimate to 217,000 from its prior estimate of 165,000.

The BLS noted that hourly wages were up 0.3% on the month – dipping below the 0.5% gains recorded over March and April the Wall Street consensus forecast of 0.4%. On a year-on-year basis, wages were up 4.3%, compared with the 4.4% pace recorded in April, the BLS said, and the Street forecast of 4.2%.

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U.S. stock futures extended gadded to gains following the data release, with contracts tied to the Dow Jones Industrial Average indicating a 187 point opening bell gain and those tied to the S&P 500 priced for a 20 point advance. The tech-focused Nasdaq was marked 43 points higher.

Benchmark 10-year Treasury note yields gained 2 basis points from overnight levels to 3.616% while 2-year notes added another 5 basis points to 4.405%. The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.03% lower at 101.381.

The CME Group’s FedWatch is now indicating a 67% chance that the Fed will hold its benchmark rate steady at between 5% and 5.25% when the central bank meets next month in Washington, with bets on a July rate hike easing to 12.5%.

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