• Private non-farm payrolls up 178,000 in May, from 157,000 in April
• Government payrolls down 3,000, from a decline of 8,000 in April
• Unemployment increased to 7.6 percent, from 7.5 percent in April
Non-farm payrolls in May stronger than expected, but April was revised down
Non-farm payrolls increased by 175,000 m-o-m in May, versus an increase of 149,000 (revised down from 165,000) in April. The reading was stronger than expectations of 163,000. Government payrolls declined by 3,000 in May, versus a decrease of 8,000 (revised from a decline of 11,000) in April. Thus, private non-farm payrolls increased by 178,000 in May, versus 157,000 (revised down from 176,000) in April. This was slightly stronger than expectations of 175,000. Finally, the unemployment rate increased to 7.6 percent, from 7.5 percent in April. Consensus expected an unchanged reading.
Sluggish growth of 2.5 percent in coming quarters
Business sentiment weakened in May and ISM manufacturing dropped below the 50-threshold. However, employment has been resilient and and the increase in May was actually larger than in April. We are not concerned for the economic prospects and stick to our view of sluggish growth around 2.5 percent in coming quarters.
Earnings and hours of all employees
Average hourly earnings remained unchanged in May, versus an increase of 0.2 percent in April. This was weaker than expectations of 0.2 percent. Average weekly working hours remained unchanged at 34.5 in May after a revision of the reading in April. Consensus expected 34.5.
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