Hiring in the United States picked up in May yet was slowed again by the struggles of many companies to find enough workers to keep up with the economy s swift
Last month’s job growth was well above April’s revised total of 278,000, the Labor Department said Friday. The unemployment rate fell to 5.8% from 6.1%.
At the root of the increases were issues related to the pandemic, both in terms of how aggressive the current recovery is and how bad things were a year ago.
There were factors such as supply chain congestion that added to the pressures. At the same time, an aggressively recovering economy pushed prices for airline tickets (up 10.2% in April), hotels (8.8% higher) and used car prices (up 10%).
While that was happening, the things that drive inflation over longer periods, like housing costs and the price of services, showed increases consistent with where they ve been over time. Shelter costs broadly increased 0.4% in April while services excluding energy rose 0.5%.
Among them: low labor supply caused by a lack of qualified workers, reluctance of some to go back to work because of Covid-related fears and the continuation of enhanced unemployment benefits, and seasonal factors that skewed expectations for job creation. The main thing we learned in this reopening trade was that we thought it was going to be this smooth trend of all this good stuff happening. What we re starting to realize is it s probably going to be a little bit bumpier, said Jim Caron, head of global macro strategies for the Global Fixed Income Team at Morgan Stanley Investment Management.
Analysis: Big U.S. Treasury auctions could restart rise in yields
U.S. Treasury auctions offering $271 billion of new debt and a key inflation report this week could end a recent lull in the bond market, reigniting a rise in yields that worried investors in the first quarter.
Treasury yields have dipped since April 1 during a two-week pause in issuance, reversing some of the dramatic rise in February and March. That eased concerns that higher borrowing costs will hurt stocks, particularly in growth sectors like technology, which have an outsized weighting in the benchmark S&P 500 index.
Investors said weak demand at upcoming auctions, which kick off on Monday, could send bond prices lower and yields higher, albeit at a slower pace than in the first quarter.