Evelyn Reynolds

The U.S. economy added 272,000 jobs for the month, coming out significantly higher than the Dow Jones consensus estimate of 190,000.
Employment swung higher in several industries, with health care leading the way again this month, followed by government and hospitality. These sectors also accounted for more than half of the month’s total gains.
Meanwhile, job losses occurred in department stores and furniture and home furnishings retailers.

Job growth in May was surprisingly strong, pushing back on lingering fears of a broader economic slowdown and likely slowing the Federal Reserve’s rate-cutting timeline.
The U.S. economy added 272,000 jobs for the month, coming out significantly higher than the Dow Jones consensus estimate of 190,000. That’s also higher than the average monthly gain of 232,000 over the last 12 months, according to the U.S. Bureau of Labor Statistics.

In May, employment swung higher in several industries, with health care leading the way again this month, followed by government and hospitality. The three sectors, respectively, added 68,000, 43,000 and 42,000 jobs, similar to trends seen over the past year. These sectors also accounted for more than half of the month’s total gains. The combined health-care and social assistance space netted more than 83,000 jobs in May.

The professional, scientific and technical services sector was also a bright spot in May, as it added 32,000 jobs during the month, which is much higher than the average monthly gain of 19,000 over the past 12 months.
On the other hand, social assistance employment trended higher as it added 15,000 last month, below the sector’s average of 22,000 jobs per month seen over the last year. Meanwhile, job losses occurred in department stores and furniture and home furnishings retailers.
Other major industries — including oil and gas extraction, construction, manufacturing, information and financial activities — all saw little or no change over the month in employment, per the report.
Investors walked away from the report discouraged that the Federal Reserve would cut rates in June, noting that the increase in job growth and above-average wage growth paints a picture of a fairly strong consumer.
“As has been the case recently, job growth was driven by non-cyclical areas like health care and government, but cyclical areas like leisure and hospitality were strong…this is likely to keep the Fed in a holding pattern, with the first cut likely coming only in September, assuming we continue to see softer inflation,” Sonu Varghese, global macro strategist at Carson Group, said on Friday.

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The unemployment rate rose for all racial groups except for white Americans in May.
The uptick in jobless rates was more pronounced for Black men than women. Black men saw their unemployment rate jump to 6.4% from 5.2%.
The number of eligible adults looking for jobs fell for white and Black workers, rose for Asian Americans and held steady for Hispanic workers.

A representative speaks with a jobseeker at a job fair at Brunswick Community College in Bolivia, North Carolina, on April 11, 2024.
Allison Joyce | Bloomberg | Getty Images

The unemployment rate for white Americans held steady from April to May, bucking the trend for all other racial groups, according to data released Friday by the Labor Department.
White unemployment remained at 3.5% last month, making the demographic group the only one that didn’t experience a rise in jobless rates from April to May. It also went against the overall unemployment rate, which edged higher to 4% from 3.9%.

Meanwhile, the jobless rate for Black Americans rose to 6.1% from 5.6%. For Asian and Hispanic workers, respectively, it rose to 3.1% from 2.8%, and to 5% from 4.8%.

“We obviously need to watch out for what’s happening with historically marginalized groups to make sure that the recovery gets experienced,” said Elise Gould, senior economist at the Economic Policy Institute.
But Gould isn’t particularly worried about the uptick in jobless rates for certain demographics just yet. “We’re not seeing any real divergence from trends there,” she added.
Gould noted that the trend was slightly stronger for Black men, who saw their unemployment rate jump to 6.4% from 5.2%, versus an increase to 5.2% from 5% for their female counterparts. The economist attributed this increase to labor force volatility and pointed out that the number has pretty much risen back to its previous levels from earlier this year.

Among white workers, the labor force participation rate crept lower, to 62.2% from 62.3%.

The overall labor force participation rate also fell to 62.5% from 62.7% and decreased to 62.9% from 63.2% for Black Americans. However, the metric rose to 65.3% from 64.7% for Asian Americans, while it held steady at 67.3% for Hispanic workers.
— CNBC’s Gabriel Cortes contributed to this report.

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Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000.
The unemployment rate rose to 4%, the first time it has breached that level since January 2022.
Job gains were concentrated in health care, government and leisure and hospitality, consistent with recent trends.
Average hourly earnings were higher than expected as well, rising 0.4% on the month and 4.1% from a year ago.

The U.S. economy added far more jobs than expected in May, countering fears of a slowdown in the labor market and likely reducing the Federal Reserve’s impetus to lower interest rates.
Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000, the Labor Department’s Bureau of Labor Statistics reported Friday.

At the same time, the unemployment rate rose to 4%, the first time it has breached that level since January 2022. Economists had been expecting the rate to stay unchanged at 3.9% from April.
The increase came even though the labor force participation rate decreased to 62.5%, down 0.2 percentage point. However, the survey of households used to compute the unemployment rate showed that the level of people who reported holding jobs fell by 408,000.

“On the surface, [the report] was hot, but you’ve also got a bigger drop in household employment,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “For what it’s worth, that tends to be a more accurate signal when you’re at an inflection point in the economy. You can find weakness in the underlying numbers.”
A more encompassing unemployment figure that includes discouraged workers those holding part-time jobs for economic reasons held steady at 7.4%.
The household survey also showed that full-time workers declined by 625,000, while those holding part-time positions increased by 286,000.

Job gains were concentrated in health care, government and leisure and hospitality, consistent with recent trends. The three sectors respectively added 68,000, 43,000 and 42,000 positions. The three sectors accounted for more than half the gains.

A Now Hiring sign hangs near the entrance to the PetSmart store on December 03, 2021 in Miami, Florida.
Joe Raedle | Getty Images

Other significant growth areas came in professional, scientific and technical services (32,000), social assistance (15,000) and retail (13,000).
Regarding wages, average hourly earnings were higher than expected as well, rising 0.4% on the month and 4.1% from a year ago. The respective estimates were for increases of 0.3% and 3.9%.
Stock market futures lost ground while Treasury yields surged following the report.
“One step forward, two steps back. Today’s data undermines the message that other recent economic data have been giving of a cooling U.S. economy, and slams the door shut on a July rate cut,” said Seema Shah, chief global strategist at Principal Asset Management. “Not only has jobs growth exploded again, but wage growth has also surprised to the upside, both moving in the opposite direction to what the Fed needs to begin easing policy.”
Previous months’ reports saw small revisions: The March gain dropped to 310,000, down 5,000, while April’s saw a cut of 10,000 to 165,000.
The report comes with investors on edge over how long the Fed will hold its benchmark borrowing rate at the highest level in some 23 years. In recent weeks, policymakers have indicated a reluctance to cut anytime soon as inflation remains above the central bank’s 2% target.
The report was “certainly hawkish” from the Fed’s perspective, Sonders said, meaning that the data would make it less likely the central bank will reduce rates anytime soon.
Following the jobs report, traders in the fed funds futures market reduced the possibility of a cut in September to about 56%, according to the CME Group’s FedWatch measure. That was down about 12 percentage points from Thursday. The market-implied probability of a second move lower in December fell to about a coin flip about being around 68% a day ago.
The Fed has not lowered rates since the early days of the Covid pandemic in 2020 and hiked 11 times between March 2022 and July 2023. The benchmark federal funds rate is currently targeted between 5.25%-5.5%. More

Speaking at the St. Petersburg International Economic Forum (SPIEF), Putin said countries “friendly to Russia” were the ones that deserved special attention.
He added that Russia would seek to boost the share of settlements conducted in the currencies of BRICS countries, referring to an economic coalition of emerging markets which includes Brazil, Russia, India, China and South Africa.
Putin said payments for Russian exports in “so-called ‘toxic’ currencies of non-friendly states” had halved over the last year.

Russia’s President Vladimir Putin gestures as he delivers a speech during the Saint Petersburg International Economic Forum (SPIEF) in Saint Petersburg on June 7, 2024.
Anton Vaganov | Afp | Getty Images

Russian President Vladimir Putin said on Friday that nearly 40% of the country’s trade turnover is now in rubles as the share conducted in dollars, euros and other “non-friendly” Western currencies has fallen away.
Speaking at the St. Petersburg International Economic Forum (SPIEF), Putin said countries “friendly to Russia” were the ones that deserved special attention as they will define the future of the global economy, “and they already make up three-quarters of our trade volume.”

He added that Russia would seek to boost the share of settlements conducted in the currencies of BRICS countries, referring to an economic coalition of emerging markets which includes Brazil, Russia, India, China and South Africa.
Putin said payments for Russian exports in “so-called ‘toxic’ currencies of non-friendly states” had halved over the last year.
“With that, the share of the ruble in import and export operations is increasing, now standing at almost 40%,” Putin said, according to a translation.
Russia’s president detailed plans for a major overhaul of the country’s domestic financial market, including plans to double the value of the Russian stock market by the end of the decade, reduce imports and boost investment in fixed assets.
His comments come as the Kremlin leverages SPIEF to court new relationships with countries in Asia, Latin America and Africa.

The West has sought to cut off Russia’s $2 trillion economy in response to Moscow’s full-scale invasion of Ukraine in February 2022. Yet Russia’s economy is expected to grow faster than all advanced economies this year, despite several rounds of international sanctions.
In its World Economic Outlook in April, the International Monetary Fund said it expected Russia to grow 3.2% in 2024, exceeding the predicted 2.7% growth rate of the U.S. (2.7%). Germany, France and the U.K. are projected to log even lower economic expansions of less than 1%.
Russia says Western sanctions on its critical industries have made it more self-sufficient and that private consumption and domestic investment remain resilient. Ongoing oil and commodity exports to the likes of India and China, as well as alleged sanctions evasion and high oil prices, have allowed Moscow to maintain robust oil export revenues.

Ukraine war

Fighting has been raging in Ukraine since Russia launched its full-scale invasion over two years ago, with Moscow’s forces securing tactical advances in the north and northeast of Ukraine in recent weeks.
Western leaders on Thursday marked the 80th anniversary of D-Day by delivering an impassioned rallying cry for the continued support of Ukraine. At the D-Day international commemoration ceremony, U.S. President Joe Biden said it was “simply unthinkable” to bow down to Russia’s aggression, pledging no let up in U.S. support for the eastern European country.
French President Emmanuel Macron joined Biden in praising Ukrainian forces for their courage in their fight against Russian forces, adding, “We are here and won’t back away.”
Ukrainian President Volodymyr Zelenskyy, who was also in attendance at the ceremony on Omaha Beach, said on social media that the event served as a reminder “of the courage and determination demonstrated in the pursuit of freedom and democracy.”
“Allies defended Europe’s freedom then, and Ukrainians do so now. Unity prevailed then, and true unity can prevail today,” Zelenskyy added.
Earlier in the week, Putin reportedly said that Russia could begin supplying long-range weapons to unspecified actors for strikes against the West, in response to the lifting of some Western restrictions on Ukraine’s use of weapons to strike military targets inside Russia.
— CNBC’s Holly Ellyatt contributed to this report. More

Russia’s annual economic forum in St. Petersburg used to be known as the country’s “Davos” in a nod to the World Economic Forum that’s held in Switzerland every year.
War in Ukraine has changed the dial in global geopolitical and trade relations, however.
The days of scores of Western business leaders and heads of state attending the St. Petersburg International Economic Forum are long gone.

Russian President Vladimir Putin is seen while visiting the Lakhta Center on June 5, 2024, in Saint Petersburg, Russia. Vladimir Putin visited a newly built Lakhta Center, a skyscraper of Gazprom, prior to his meetings at the Saint Petersburg International Economic Forum SPIEF 2024.
Contributor | Getty Images News | Getty Images

Russia’s annual economic forum in St. Petersburg used to be known as the country’s “Davos” in a nod to the World Economic Forum that’s held in Switzerland every year.
War in Ukraine has changed the dial in global geopolitical and trade relations, however. The days when scores of Western business leaders and heads of state attended the St. Petersburg International Economic Forum, an event that enables Russia to showcase its economy and investment opportunities, are long gone.

Now, Russia is looking to use SPIEF to court new relationships with countries apparently less squeamish about doing business with a country that has invaded its neighbor — namely a number of countries in Asia, Latin America and Africa — and those willing to turn a blind eye to the war for their own economic interests, such as Russia’s oil and gas customers in eastern Europe, Slovakia and Hungary.
SPIEF is the latest effort in the Kremlin’s campaign to try to show that everything is still normal, Max Hess, fellow at the Foreign Policy Research Institute and author of “Economic War: Ukraine and the Global Conflict Between Russia and the West,” told CNBC Thursday.
“They trumpet and highlight international attendees and domestic propaganda, extremely, but except for a few of the usual characters like the Hungarian Foreign Minister [Peter Szijjarto], nobody new and notable is showing up and also no new major investments or deals will be agreed at this forum, at least not with major foreign countries,” he said.

A view of the stand of the Russian private bank Alfa-Bank during the 27th St. Petersburg International Economic Forum in St. Petersburg, Russia on June 05, 2024.
Anadolu | Anadolu | Getty Images

SPIEF has been blacklisted by most Western businesses and politicians since Feb. 24, 2022, when Russian forces invaded Ukraine. But Russia is keen to show it’s open to business from elsewhere and indeed, its need and desire for economic partnerships with non-Western nations has accompanied heightened anti-Western sentiment and rhetoric in the last few years.
Moscow claims that it wants to combat Western hegemony and to establish a “multipolar” world order, and has promoted trading partnerships excluding the West as a way to do this. On that note, the theme for the 2024 SPIEF is “The Foundations of a Multipolar World — The Formation of New Areas of Growth.”

This year’s program includes sessions on expanding Russian development of the Arctic, the expansion of the BRICS group of economies and Russia’s car industry. There’s also sessions on “Family Values,” another keystone of Russian President Vladimir Putin’s fifth term in office, and Russia’s relationship with the West.
One session, entitled ”The Empire of Evil’: Has the West successfully demonized Russia?,” asks delegates to consider whether a purported “smear campaign” by the West against Russia has succeeded.
Representatives from 136 countries are reportedly attending the forum that runs from June 5-8, Russian presidential foreign policy aide Yuri Ushakov told reporters ahead of the forum.
Putin will address delegates on Friday, where he’s expected to promote Russia’s economic resilience, investment opportunities and growth despite international sanctions. It’s uncertain how much the war in Ukraine, or “special military operation,” will feature in his address, however, with Moscow likely to want to skirt over the conflict as it looks to attract investment.

Guests from foreign countries seen during the first day of the St. Petersburg International Economic Forum 2024.
Sopa Images | Lightrocket | Getty Images

What’s galling for Western nations is that Russia has indeed managed to adapt its economy to a new reality of sanctions and trade restrictions on some of its biggest industries, such as the oil and gas sector.
Russia’s economy is expected to grow faster than all advanced economies this year, the International Monetary Fund predicted back in April.
In its last World Economic Outlook, the IMF said it expected Russia to grow 3.2% in 2024, exceeding the forecasted growth rates for the U.S. (2.7%), the U.K. (0.5%), Germany (0.2%) and France (0.7%).
Russia says Western sanctions on its critical industries have made it more self-sufficient and that private consumption and domestic investment remain resilient. Meanwhile, continuing oil and commodity exports to the likes of India and China, as well as alleged sanctions evasion and high oil prices, have allowed it to maintain robust oil export revenues.

Russian President Vladimir Putin speaks to the Brics Business Summit via a prerecorded video on August 22, 2023 in Johannesburg, South Africa.
Per-anders Pettersson | Getty Images News | Getty Images

Analysts will be keeping an eye on any announcements regarding the BRICS organization — the group of economies comprising Brazil, Russia, India, China and South Africa and, since January, new members such as Ethiopia, Iran and Egypt — with Turkey mooting the possibility of joining the bloc. Opportunities for economic partnerships between BRICS nations feature heavily in this year’s SPIEF.
Kremlin spokesman Dmitry Peskov welcomed Ankara’s interest in joining the group, he said on Tuesday, saying the subject would be on the agenda of the next BRICS summit.
Analysts like Hess believed any talk of the BRICS group expanding was political posturing.
“Will Putin actually get anything meaningful for what he wants? No, maybe the kabuki theater [political posturing] will go on and Turkey will hold some more talks about BRICS membership. But as we saw with the January announcement of the expansion of that organization, it’s an entire and complete nothing burger,” Hess said. More

Economists expect the Bureau of Labor Statistics to report Friday that the U.S. economy added 190,000 more jobs in May, up slightly on the month.
Average hourly earnings are expected to show a 0.3% increase, slightly higher on the month, putting the 12-month increase at 3.9%.

Liu Jie/Xinhua via Getty Images

Investors will be looking to May’s nonfarm payrolls report for more clarity on whether the Federal Reserve can ease up in its battle against inflation.
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report that the U.S. economy added 190,000 more jobs on the month, which would be a slight step up from the 175,000 gain in April.

Moreover, markets will be taking a close look at wage numbers, as average hourly earnings are expected to show a 0.3% increase, slightly higher on the month, putting the 12-month increase at 3.9%, or the same pace as the previous month, and an indication that the central bank still has more work to do.
Other employment indicators this week showed a deceleration in private payrolls growth, as ADP reported growth of just 152,000, and a slight uptick in the pace of initial filings for unemployment benefits.
“The jobs report for May is now particularly consequential,” Citigroup economist Andrew Hollenhorst said in a note. “A weaker reading [of less than 175,000 jobs and an unemployment rate of 4% or more] would be a final piece of evidence that the slowdown will continue. On the other hand, an unexpected strengthening would reinforce the idea that there is no urgency to cut rates and send Treasury yields higher again.”
Citi expects that the report will show just 140,000 jobs, with the unemployment rate hitting 4% for the first time since January 2022.
If that is the case, it could give the Fed impetus to cut interest rates sooner than expected.

Markets currently are pegging the first rate cut to come in September, with one more on the way in December. Citi is below consensus on its jobs outlook and by far has the most out-of-consensus Wall Street view on rate reductions, with an expectation the Fed will start in July and keep going with four reductions by the end of the year.
However, Goldman Sachs also expects a below-consensus 160,000 gain in payrolls as it sees seasonal adjustments holding back job growth. However, the firm also anticipates an extra pay week in the month to offset some of the seasonal distortions.
On wages, Goldman Sachs is mostly in consensus, keeping gains at a rate that Fed officials say is inconsistent with its 2% inflation target.
The BLS will release the report at 8:30 a.m. ET.

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