Growing Pains

Image source: goir - Shutterstock

What's going on?

Data out on Friday showed that the US added more jobs than expected last month, but its a band-aid on a broken bone at this point

What does this mean?

Even in a US economy that shrank for the first time in almost two years last quarter, the countrys businesses are valiantly keeping their chins up: they added 428,000 new jobs last month 28,000 more than economists were expecting. Leisure and hospitality yet again led the gains with 78,000 extra jobs, taking its unemployment rate to its lowest since September 2019. Thats all the more impressive when you consider that the proportion of people either in or looking for work fell to 62.2% last month, meaning there was an even smaller pool of available workers to choose from.

Why should I care?

For you personally: Better ask for a raise pronto.
You might be pleased to hear that average hourly pay increased by 0.3% in April compared to the month before. But you might not be so pleased to hear that it was up 0.5% the month before, and that some economists are hoping this could be the start of a slowdown in wage growth. Still, that could work in your favor in the long run: a wage slowdown should help the Federal Reserve (the Fed) slow down the fastest rise in prices in 40 years.

The bigger picture: Is the ECB finally going to back down?
The Fed raised interest rates substantially last week for that specific purpose, but the European Central Bank (ECB) hasnt been prepared to commit to a similar move. That could be about to change: some of the ECBs most reluctant economists said last week that theyre now open to hikes after eurozone inflation hit a record high last month. The regions first hike in more than a decade could happen sooner rather than later too, with calls for the ECB to step in as as soon as July.

Originally posted as part of the Finimize daily email.

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