The May jobs report from the Bureau of Labour Statistics beat expectations for both wage growth and jobs added.
It was yet another sign the labour market continues to get in better shape.
On Monday, we learned the Fed’s 19-component Labour Market Conditions Index, or LMCI, rose 1.3 points in May after 2 months of posting negative numbers. The declines in March and April were also upwardly revised, to -1 from -1.8 initially and -0.5 from -1.9 respectively.
The May gains also increased the cumulative increase in the index in the current expansion cycle to 322, up from 315 points in April.
“At the LMCI’s average pace of expansion over the current cycle, the index is on track to reach pre-crisis levels in about 10 months,” Barclays’ Jesse Hurwitz said.
The index reinforces the overall positive outlook for many forecasters, and Hurwitz said it reiterates his prediction of 200,000-225,000 jobs added per month this year.
Fed Chair Janet Yellen has referenced the LMCI as a sign of the job market stability before, so improvement in this measure tells us the Fed will be more emboldened to raise rates sooner than later.