NFP could bring about one more hike in June

Data released on Friday, showed Nonfarm Payrolls rose by 339K in May surpassing expectations. Analysts  point out payroll strength keeps the door open for another rate hike by the Federal Reserve in June.

The two-month net revisions also added a notable 93k jobs to the employment series, which resulted in the 3-month moving average moving significantly higher to 283k in May from 222k in April.

Not really the direction the Fed’s is hoping for. With that said, the unemployment rate unexpectedly rose by 0.3pp to 3.7%, though the details behind that move were more nuanced.

The May jobs report should leave the hike option fully on the table for the Fed. If Fed officials were looking for clear signs of labor-market slowing, wanalysts do not think this report clearly offers that perspective despite the rise in the UE rate. Analysts continue to look for the Fed to lift rates by a final 25bp to 5.25%-5.50% range in June, but also acknowledge that the FOMC’s decision will be a very close call.