US jobs data beats, Aussie dollar gets crushed

The labour market is still rolling.

The US economy added 280,000 jobs in May, according to the latest report from the Bureau of Labour Statistics.

The unemployment rate rose, however, to 5.5% from 5.4%.

The Australian dollar fell more than one US cent on the news to just above the US 76c mark.

The report also showed that wages rose faster than expected, with wages rising 0.3% over the prior month and 2.3% over the prior year.

The labour-force participation rate also ticked up to 62.9% from 62.8%.

Following the report, the US 10-year-note yield rose to as high as 2.435%, a year-to-date high. Stock futures remain lower.

Overall, this report was a bit of a mixed bag but shows a labour market that is still adding workers while wage pressures — a missing element of the labour market that the Federal Reserve had been looking for — are starting to make themselves known.

The report showed that the number of jobs in the construction, retail, and healthcare industries all increased in May, while the number of jobs in the mining sector fell for the fifth straight month as the decline in oil prices continues to weigh on employment.

In a note to clients after the report, economists at Capital Economics wrote that the report “adds to the evidence that the US economy is regaining momentum after another winter slowdown.”

The firm added: “Overall, at this stage this evident strength in the labour market probably isn’t enough to persuade the Fed to hike rates by July, but it definitely makes a rate cut by September probable. Only 24 hours later, the IMF’s suggestion that the Fed should wait until 2016 looks very dated.”

Via Bloomberg, here’s a quick overview of what Wall Street was looking for ahead of the report:

  • Nonfarm payrolls: +226,000
  • Unemployment rate: 5.4%
  • Average hourly earnings, month-on-month: +0.2%
  • Average hourly earnings, year-on-year: 2.2%
  • Average weekly hours worked: 34.5

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