US: Nonfarm payrolls are expected to moderate to 180,000 in May – BMO CM

The research team at BMO Capital Markets suggests that US nonfarm payrolls are expected to moderate to 180,000 in May after rebounding sharply the prior month, holding close to the six-month trend (176,000).

Key Quotes

“The prior report showed broad strength across industries, while surging work hours flagged a decent pickup in Q2 GDP. After plumbing cycle lows in April, the unemployment rate will likely edge up to 4.5%. This assumes some rebound in the participation rate, which has been grinding higher since mining three-decade lows in 2015.”

“Broad measures of unemployment are also near cycle lows, reflecting a tightening job market. But labour shortages, even for some low-skilled positions, haven’t sparked a material upturn in wages. Growth in average hourly earnings actually retreated to 2.5% y/y last month. Still, a solid jobs report should cement expectations of a June 14 rate hike by the Fed.”