The jobs report for May was released this morning, and it showed that the actual number of jobs created last month was more than double what was forecasted.

The Dow Jones consensus estimate was for 80,000 new jobs to be created in May, but the actual number was 172,000 jobs created and the stock market does not like it at all.  Stocks, bonds, gold, and even oil are down this morning.  March and April jobs numbers were also revised higher, resulting in solid job growth for the past 3 months.

“This is a labor market that is stronger than it was last year and is looking pretty darn solid, despite high energy prices and higher inflation generally,” said Gus Faucher, chief economist at PNC.  “There’s no indication that the labor market needs support.”

And that’s what is upsetting the markets.  The labor market doesn’t appear to need any help from the Fed, meaning no interest rate cuts on the near-term horizon.  A healthier economy, but no cheaper money – no juice for the markets.

The unemployment rate remained at 4.3% in May, a level generally accepted as “full employment” in economics.

An unemployment rate of 5% is often considered full employment.  This level of unemployment is enough to minimize inflation and allow workers to move between jobs, but those wanting full-time work should be able to find it (even if it is not their preferred occupation).  –  https://www.investopedia.com/terms/f/fullemployment.asp

More locally, we can see that the unemployment rate in the state of Georgia has been consistently below 4% for the past 5 years.  (When searching for information about Georgia, make sure you’re looking at the state and not the country.  The country of Georgia has a 14.4% unemployment rate.)

And even more locally, we see that unemployment in the Atlanta metro area is also 2.8% and declining.

When we zoom back out to the overall US economy and review the most important economic indicators, we see the US economy is still growing in the shadow of a war and much geopolitical uncertainty.  The Atlanta Fed is currently forecasting 3.0% US GDP growth for this quarter, and their estimate may rise next week in response to the strong jobs report released today.

Have a great weekend.

Jack C. Harmon II, CFP^®, CIMA

Principal, Harmon Financial Advisors

Registered Principal, Raymond James Financial Services

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