The ADP employment data, known as the “small non-farm payroll”, unexpectedly upset the market, causing the market to worry that the “non-farm payroll” employment report may also be far worse than expected. Wall Street analysts said they were not worried.
The U.S. non-farm payrolls report for May will be released on Friday (3rd), FactSet data shows that the market expects non-farm payrolls to increase by 322,500, down from 428,000 in April, and the unemployment rate is expected to be 3.5%, compared with 4. Months are basically the same. However, before the release of the non-farm payroll data, the US ADP employment data increased by only 128,000 in May, far less than half of the expected (300,000), and the worst monthly performance since the outbreak of the innovation crown.
Market worries that this may be an ominous omen for the upcoming May non-farm payrolls report, Wall Street analysts said they are not worried, because the trend of the past few months seems to be the correlation between small non-farm payrolls and non-farm payrolls. weaker.
Rubeela Farooqi, a U.S. economist at High Frequency Economics, expects U.S. job growth to remain on an upward trend, but likely to slow as the Federal Reserve continues to raise interest rates sharply in the coming months.
However, Michael Shaoul, chief executive of Marketfield Asset Management, pointed out that even with a slowdown in U.S. hiring, there are not many signs that layoffs will increase, meaning the labor market remains relatively healthy. Last week (as of 5/28), the number of initial unemployment benefits in the United States was 200,000, which was lower than the market expectation of 210,000, a decrease of 11,000 from the previous week, and the number of continuing unemployment benefits reported 1.309 million, a record high in December 1969. lowest since.
Shaoul identified three possible factors for the slowdown in hiring. The first is that many companies have returned to pre-pandemic levels, or even higher, which reduces the urgency of hiring. The second is that labor supply remains constrained, and the number of qualified job seekers has decreased. The Third Federal Reserve’s tightening policy may make corporate recruitment more conservative.
Citi economist Veronica Clark said that while the non-farm payrolls report continues to provide evidence for the Fed’s policy of raising interest rates, it is unlikely to have much impact, especially if labor market demand continues to outstrip supply.
Clark predicted that Fed policy could still be more hawkish as underlying pressure to push for higher inflation may remain.