Monday Moneybeat: A lackluster jobs report

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: You know the labor market has been on a good roll when jobs growth of 75,000 for the month is a bad sign. But that it is: The Labor Department’s report for May was a downer.

First, labor economists revised down reported job gains in March and April. Hiring growth for those two otherwise pretty good months was 75,000 fewer jobs than first estimated. Then if you consider May growth of 75,000 jobs, what that means is basically zero progress from April.

So here’s where we stand after five months, taking into account this recent slowdown: job growth has averaged 164,000 per month. That’s good and it should lower the already low unemployment rate over time. But it is also a significant step down compared with last year’s pace of 225,000 new jobs per month.

The Labor Department reports the unemployment rate for May remained unchanged at 3.6 percent.

One other component part of this report: average hourly pay. It rose just 3.1 percent year on year, the smallest such annual increase since last September. Given the tight job market, wage gains should probably be higher than that.

REICHARD: That lackluster news on jobs had the effect of rallying Wall Street. Investors took it as a sign that the Federal Reserve might cut interest rates. Some economists have suggested the Fed moved too high, too fast, and too frequently boosting rates after years of near-zero borrowing costs.

Fed chairman Jay Powell said publicly the central bank would “act as appropriate” if the governors perceived a threat to the economy from a prolonged trade war. That statement prompted stocks to surge. Then the jobs report did the same.

So on the week, stock-index gains virtually wiped out all the losses in May.

The S&P 500 gained 4.4 percent.

The Dow rose 4.7.

The Nasdaq picked up 3.9 percent.

And the Russell 2000 added 3.3.

EICHER: Here’s one final economic data point: The Federal Reserve reported a big surge in consumer borrowing in April, a month-on-month rise of 5.2 percent, the fastest pace in five months.

Consumer credit is a key indicator of the willingness of households to increase borrowing to support consumer spending. And that in turn accounts for 70 percent of economic activity.

And that is this week’s Monday Moneybeat.

(AP Photo/Richard Drew, File) In this May 30, 2019, file photo trader Craig Esposito, right, works on the floor of the New York Stock Exchange. 

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