Total nonfarm payroll employment in the U.S. rose by 559,000 in May, while the unemployment rate fell to 5.8 percent. - The U.S. Bureau of Labor Statistics reported today. Significant job gains occurred in leisure and hospitality, public and private education, and health care and social assistance.
In May, the number of unemployed fell by 496,000, to 9.3 million. These rates are well below the peak recorded in April 2020, but remain well above levels before the coronavirus pandemic (COVID-19), when there were 5.7 million unemployed in February 2020. Supply constraints, rising inflation, and labor shortages are weighing on production capacity, according to published data, as many workers, mostly women, remain at home and government assistance may discourage them from taking up employment. As a result, firms are struggling to fill vacancies to meet rising demand, forcing them to raise wages to attract new workers. Hence, hourly earnings rose 0.5 percent, above forecasts of 0.2 percent.
U.S. stock indexes rose after the release of macroeconomic data from the labor market. Investors began to fear that the U.S. central bank would have to accelerate the deadline for tapering ultra-loose monetary policy to cool the overheating economy. However, the latest reading from the labor market showed a different scenario, which helped calm those fears. Dow Jones futures rose more than 0.2 percent, with the S&P 500 and Nasdaq up more than 0.4 percent even before the session.
A time of rising oil prices
Summing up the past week, it is worth noting the price of crude oil, which rose more than 4 percent in the last seven days to its highest level since 2018. This comes on the back of hopes for a rebound in demand during the holiday season and the lifting of economic restrictions and loosening of air and tourism restrictions. EIA data showed a larger-than-expected decline in inventories, down by as much as 5.08 million barrels.
Saudi Arabia's energy minister said it would be premature to talk about potential overheating in the global oil market before demand picks up. Earlier this week, OPEC+ agreed to gradually reduce supply cuts through July, signaling continued strengthening in market fundamentals. The previous week, crude oil had also risen more than 4 percent.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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