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Macro Developments Since May 2-3 FOMC: Equally Mixed Labor [1/2]

  • The two payrolls reports since the last FOMC have been decidedly mixed, first coming in stronger than expected across the board but offset by particularly heavy downward revisions before the latest data for May had massively conflicting details between the establishment and household surveys.
  • Taking the most recent figures, payrolls increased 339k for a 144k beat to consensus which was further compounded by a +93k net upward revision over the prior two-months.
  • It left a three-month average of 283k, almost exactly the same as at end-2022 for no sign of moderation from a pace that is nearly three times what Powell has previously deemed a long-term sustainable level.
  • Caveating this was employment in the separate household survey falling -310k for the largest gap to nonfarm payrolls since Apr’20. It meant the unemployment rate increased from 3.4% to 3.65% (cons 3.5) for the first rounded 3.7% figure since Oct’22 and having last been higher in Feb’22.
  • The first more significant increase in the rate in recent months after a string of downward surprises, the unemployment rate nevertheless remains far off the FOMC median of 4.5% for Q423 as from the March SEP (in a central tendency range of 4.0-4.7%).

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