According to payroll processor ADP, the U.S. private sector added 253K jobs in May, beating expectations of 185K.
Friday morning the Labor Department will release its more comprehensive report including both public & private sector employment statistics. Economists put 180K new jobs as the benchmark for May.
ADP and other industry experts strive to predict the state of the labor market on the monthly basis, however abnormal weather patterns, among other factors, are typically not accounted for. The accuracy of the labor statistic estimates can vary sometimes resulting in massive discrepancies, as witnessed in March & April 2017. However, spring has sprung and volatile weather patterns have faded leading to what’s hoped to be a more accurate ADP report.
A strong showing by May could solidify the Fed’s decision to bump interest rates in June. According to the CME FedWatch Tool, a June hike of 100-125 bps is clocked in at 95%.
Unemployment is expected to hold steady at 4.4% which will likely hinder future payroll gains as the pool of qualified candidates continues to shrink. However, the tightening labor market should trigger increasing wage growth across the country.
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