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May payrolls bring major surprise

May payrolls rise to 339k (versus expectations of a 195k increase)

02 June 2023

Today marked the release of an important employment report in the US. It is important in that it will be one of the key measures the Federal Reserve (Fed) will be watching for signs of either a still strong jobs market, meaning the Fed will have to continue to be hawkish, or a market that is slowing down, in which case it can skip a rate hike this month (as the markets seem to believe). And like most things that come out of the US at present, this was a major surprise, to the upside. May payrolls shot up to 339k (versus expectations of a 195k increase). Along with an April jobs report revised further higher, this will all make pausing this month a more difficult decision for the Fed even if Powell has already signalled it is likely. A Fed pause will need to see rapidly softening CPI prints but with this turbocharged jobs growth, how likely is that?

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Charles Hepworth

Investment Director
My Insights

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