- Laura Rosner, U.S. economist at BNP Paribas
The economy contracted 1.0% in the first quarter, the ADP non-farm payrolls report disappointed markets to the downside, Fed officials were ready for weak job growth and an uptick in the unemployment rate. Companies were projected not to increase hiring amid slowing economy, expecting they can meet demand without additional workforce. In contrast, the labour market has shown its resilience once again.
According to a report from the Labor Department, American companies added 217,000 jobs in May, pushing payrolls to their pre-recession peak, and outpacing analysts' predictions, who were betting on a 215,000 gain. At the same time, the overall unemployment rate remained unchanged at 6.3%, also surprising markets to the upside. What is more important, the closely-watched participation rate remained unchanged at 62.8%, staying at the lowest since 1978. Despite solid figures, it took extremely long for the economy to return to its pre-recession levels. A report also showed private hiring increased 216,000 over the period, while payrolls stripping out government agencies hit 116,1 million last month, even surpassing pre-crisis peak.
Markets, however, were not really convinced by the figures, as EUR/USD rose above the recent high, hitting 1.3676.
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