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Investors boost bets for Fed rate rise after bumper US jobs report

World’s biggest economy adds 172,000 jobs in May in sign labour market is ‘turning the corner’
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{"text":[[{"start":10.45,"text":"The US economy blew past Wall Street expectations to add 172,000 jobs in May, signalling a rebound in the labour market and propelling bets that the Federal Reserve will raise interest rates this year."}],[{"start":24.75,"text":"Friday’s figure from the Bureau of Labor Statistics was more than double the 85,000 forecast by economists polled by Bloomberg and provided the latest indicator that US employment is stabilising after a rocky 2025. "}],[{"start":38.15,"text":"Hiring figures for March and April were revised up by a combined 93,000 to 214,000 and 179,000 respectively. The unemployment rate was unchanged at 4.3 per cent."}],[{"start":52.3,"text":"“The US labour market is finally turning the corner,” said Dario Perkins at TS Lombard. "}],[{"start":58.099999999999994,"text":"Short-term Treasury yields hit a 15-month high and the dollar jumped as traders bet that the Fed will raise interest rates by a quarter point by December. Before the hiring figures, such a move was not fully priced until April next year."}],[{"start":72.75,"text":"The two-year Treasury yield, which moves with rate expectations, jumped as much as 0.13 percentage points to about 4.18 per cent, its highest since February 2025. Meanwhile, the dollar index, a measure of the buck against half a dozen peers, rose as much as 0.7 per cent to a two-month high. "}],[{"start":94.25,"text":"US stocks fell as government bonds sold off, with the blue-chip S&P 500 closing 2.6 per cent lower to bring up its first weekly drop in 10 weeks. The tech-heavy Nasdaq Composite, which is sensitive to changes in borrowing costs because it is stacked with companies with high valuations, tumbling 4.2 per cent."}],[{"start":null,"text":"

"}],[{"start":114.3,"text":"Friday’s report comes after separate figures released this week showed job openings jumped to a two-year high in April. "}],[{"start":121,"text":"“This is a blowout jobs report,” said Olu Sonola, head of US economics at Fitch Ratings. “Three straight months of payroll gains, along with the upside surprise in job openings earlier this week, tell us the labour market is on firmer footing.” "}],[{"start":136.3,"text":"The May employment gains were led by the leisure and hospitality industry, which added 70,000 jobs. Employment in local government and healthcare rose sharply, while other private sector businesses also posted modest gains. "}],[{"start":149.10000000000002,"text":"The BLS indicated the bankruptcy of Spirit Airlines was the main driver of 9,000 job losses in the air transportation sector."}],[{"start":158.15000000000003,"text":"The report points to growing strength in the US labour market following a sluggish performance last year in which just 10,000 posts were added on average each month."}],[{"start":168.35000000000002,"text":"The jobs market was jittery at the beginning of 2026, fluctuating between gains and losses that made it difficult for economists to gauge the health of the world’s biggest economy. But payrolls have now expanded significantly for three straight months. "}],[{"start":183.25000000000003,"text":"Still, the year-on-year rate of wage growth slowed from 3.6 per cent in April to 3.4 per cent in May. That leaves it further below the latest inflation reading of 3.8 per cent, suggesting that real wages are shrinking."}],[{"start":197.65000000000003,"text":"Analysts said the uptick in the jobs market gives the Fed more room to raise interest rates in the months ahead to tackle a burst of inflation triggered by Donald Trump’s war in the Middle East, which has sent fuel prices soaring. "}],[{"start":210.20000000000005,"text":"“Providing the labour market does not suffer a dramatic summer jobs scare again, then it looks increasingly likely that the [Federal Open Market Committee] will enact a couple of insurance hikes later this year,” said Stephen Brown at Capital Economics."}],[{"start":224.80000000000004,"text":"Beth Hammack, president of the Cleveland Fed, who holds a vote on the central bank’s policy-setting board, said Friday’s report suggested the labour market was now “roughly in balance” while “persistently high inflation is the bigger concern”."}],[{"start":239.10000000000005,"text":"“For today, it’s reasonable to keep rates steady given the uncertainties around the economic outlook,” she said. “But if recent trends continue, it may soon be appropriate to act.”"}],[{"start":249.55000000000004,"text":"The next Fed meeting, later this month, will be the first under new chair Kevin Warsh, who has indicated he favours lower rates. But analysts said escalating inflation and a stable jobs market would make it hard to make the case for a reduction. "}],[{"start":264.15000000000003,"text":"Economists also expect the Fed may drop language in its policy statements signalling a bias towards lowering rates. "}],[{"start":271.50000000000006,"text":"Still, some analysts cautioned against reading too much into the numbers, noting that much of the gains in leisure and hospitality were probably driven by seasonal factors and the upcoming World Cup, being held in the US, Canada and Mexico. "}],[{"start":286.05000000000007,"text":"“Today’s strong jobs number looks more like a seasonal surge than a turning point for the labour market,” said Adam Schickling, senior economist at Vanguard. “The labour market still appears resilient, but not as if it’s reaccelerating.”"}],[{"start":299.25000000000006,"text":"Additional reporting by Ian Smith"}],[{"start":310.00000000000006,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780718490_5340.mp3"}

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