Friday’s highly anticipated monthly labor market report was roughly in line with expectations, and mortgage rates ended the week nearly unchanged.
In May, the economy gained 559,000 jobs, a little below the consensus forecast of 650,000. Particular strength was seen in the leisure and hospitality sectors. The unemployment rate fell to 5.8%, slightly below the consensus of 5.9%. Average hourly earnings, an indicator of wage growth, were 2.0% higher than a year ago, up from an annual rate of increase of 0.4% last month.
Even with another month of solid job gains, the economy still has a long way to go to recover the losses due to the pandemic. It has about seven million fewer jobs than it did early last year. This is a primary reason why Fed officials have expressed a desire to move slowly before tightening monetary policy.
A couple of other significant economic reports released this week from the Institute of Supply Management (ISM) remained at very high levels, as expected. The national manufacturing index rose to 61.2, and the national services index increased to 64.0, a record high. Levels above 50 indicate that the sectors are expanding. Of note, a large number of companies reported difficulties in hiring enough workers to keep up with growing demand.
Looking ahead, investors will continue watching global Covid case counts and vaccine distribution. Beyond that, the Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. The next European Central Bank meeting also will take place on Thursday.