Fed Likely To Skip June Rate Hike Despite Mixed Jobs Report

The Labor Department reported on Friday that nonfarm payrolls rose by a seasonally adjusted 339,000 in May, well above the 190,000 expected by economists polled by The Wall Street Journal, marking the 29th straight monthly increase. 

While the hiring market was hot, other indicators in the report, including rising unemployment and slowing wage growth, made the signal for a rate hike difficult to judge.

The unemployment rate rose to 3.7% in May, above expectations of 3.5%. The unemployment rate was the highest since October 2022 but remained near the lowest level since 1969.

The report appeared to suggest that banking problems sparked by the collapse of Silicon Valley Bank did not appear to have had much of an impact on the job market.

Some Fed officials have indicated or suggested in recent weeks that they are likely to keep rates on hold at June 13-14 meeting. 

Philadelphia Fed President Patrick T. Harker said this week that he supports considering no rate hike at this meeting.

Fed Governor Philip Jefferson, who has been nominated as vice chairman, said on May 31 that the central bank favors keeping rates steady at its June meeting to give policymakers more time to assess the economic outlook.

Nationwide chief economist Kathy Bostjancic said in her report that the Fed appears "inclined to skip tightening policy in June, but may resume it in July. Today's strong jobs data support this action."

Bets on a 25 basis point hike briefly rose to 38% after the jobs report, before falling back below 30%, according to CME Group data.

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