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Friday jobs data will ‘underline’ Fed challenges, economist says
Data on nonfarm payrolls, the unemployment rate and hourly wages due Friday will highlight the challenges the Fed faces heading into the June policy meeting, according to Joe Davis, chief economist at Vanguard.
Economists polled by Dow Jones expected non-farm payrolls to rise by 190,000 in May, which would be a smaller monthly increase than the 253,000 added in April. They forecast an unemployment rate of 3.5%, slightly higher than the 3.4% seen in April.
Hourly wages are expected to grow 0.3% on a monthly basis and 4.4% compared with the same month a year ago. In April, wages rose 0.48% month over month and 4.45% on an annualized basis.
“We believe tomorrow’s labor market report will underline the challenges the Fed continues to face in their push to drive inflation back towards target,” Davis said. “We remain of the view that they should raise rates in June to enforce their resolve before pausing for some time to assess the impact on macro conditions, though the more important aspect of our perspectives remains the Fed being on hold through at least the end of the year.”
“Indications of continued labor market tightness in tomorrow’s report would provide further support for these views,” he added.
— Alex Harring
First-quarter earnings scorecard
First-quarter earnings season is winding down with 99% of S&P 500 companies having reported results. Seventy-eight percent of S&P 500 companies have reported a positive earnings-per-share surprise for the quarter, which is above the five-year average of 77%, according to FactSet.
Earnings growth has disappointed compared to the long-term average, however. S&P 500 companies are beating earnings estimates by 6.5% in aggregate, which is below the five-year average of 8.4%, according to FactSet.
— Yun Li
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