May’s job growth came in well above forecasts, as the BLS reported that 272K new jobs were created. However, revisions to the data for March and April shaved 15K jobs from those months combined. In addition, the unemployment rate rose from 3.9% to 4%, which is the highest since January 2022.

This report caused rates to spike today but there are some important caveats. Some of it has to do with how these numbers are calculated which can get convoluted. What I find most intriguing is that full time employment keeps loosing steam, we saw over 625k full time job losses while only an increase in 286k in part time employment. If you’re looking at those numbers and wondering how there was 272k new jobs created if that many full time jobs were lost you’re not alone! A big factor is that after someone stops looking for a job for a while they stop counting against the job numbers.

Bottom line is that there is underlying weakness to this jobs report that is not reflected in the top line 272k number. The hope is that the Fed sees through this. While this most likely puts a rate cut out of reach for July I still think rates cuts are on the table later in the year. Keep an eye out on the unemployment rate, if that keeps ticking up to around 4.2% then that could be enough for the Fed to intervene.