U.S. nonfarm payrolls May 2014
Payrolls grew by 217,000 in May and so roughly in line with expectations.
However, the report will be remembered for delivering the highest ever reading for total payrolls with the number of employees surpassing the January 2008 high-water mark by 98,000 in May. And while of course, that is good news indeed, the labor market does not feel nor look like it did six years ago. As the following chart depicts, the accompanying unemployment rate is far higher today at 6.3% than its 5.0% when payrolls last peaked.
The composition of employment has also changed radically with construction one notable standout. The U.S. economy has been forced to reshape itself under the new normal and post-financial crisis. As a result of today’s report investors seem to believe that there is no reason to rip up the script. Monetary stimulus is likely to remain evident even as the taper-countdown goes on, which means that bond yields are likely to remain low thus underpinning the rally in equity prices to fresh record highs. The May reading was the fourth-straight gain of more than 200,000 for the U.S. economy.
Chart shows all-time high for U.S. payrolls