By Isaac Cohen*
The first quarter contraction of 0.7 percent in the US economy has been followed by two consecutive months of robust job creation. After gaining 233,000 new jobs in April, the Labor Department informed that 280,000 new nonfarm jobs were created in May. Hourly earnings for private sector workers, which were lagging behind at a yearly rate of 2 percent, increased 2.3 percent in May. The unemployment rate increased slightly from 5.4 percent in April to 5.5 percent in May, for a good reason, because more persons were actively looking for jobs. These positive numbers confirmed the central bank’s perception that the winter downfall was caused by transitory factors.
Except for mining, all sectors showed increased hiring. The inclusion of oil and gas production in the mining sector led to a loss of 17,000 jobs in May, adding to cumulative job losses of 68,000 since January.
Markets reacted negatively to the good news, because they were perceived as confirmation that the Federal Reserve will soon start increasing interest rates. The reaction was swift, sales of US government bonds increased, while the stock market closed lower for the second consecutive week.
However, a day before the release of the job numbers, the International Monetary Fund jumped into the guessing game suggesting the Federal Reserve should wait until the first half of 2016.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.