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US Employment Puzzle

Sameer Kalra

Last week the jobs data indicated an addition of 272,000 in May 2024 but the unemployment was higher at 4%. This came as a surprise as estimates were much lower and currently bad news is good news for financial markets. This complicates the direction of rates in the coming months. 


A few interesting details came out after the data release. First was that the number of jobs lost in the permanent category was almost the same amount of jobs gained in the temporary category in the last few years. Other data indicated that many jobs went to undocumented immigrants that are separated from foreign-born labour. 


This combination might keep the absolute addition of jobs higher even in the coming months. But the important indicator would unemployment rate as the Federal Reserve would be focused more towards it for a rate cut. For now, the actual data is much lower than the estimated peak of 5%. 


The next couple of months are very important as the USA gains election momentum. And as incremental data gets released it would make things more clear whether there is any possibility of a rate cut this year or not.

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