The fine print
The Fed always needs more hard data to decide monetary policy, and it will get more today. The nonfarm payrolls report for May will be released at 8:30 a.m. ET, following other data this week that showed a slowdown in job openings in April and the ADP’s approach to private employment reporting a slower growth scenario. Separately, Challenger’s job cuts report found that announced job cuts since the start of the year are at the third highest level since May 2009 and that hiring rates have declined.
In numbers : On average, economists expect the U.S. economy to have added 182,000 jobs in May, up from 175,000 jobs initially estimated by the Bureau of Labor Statistics in April. Watch for any revisions to April’s numbers, and with inflation the Federal Reserve’s main concern, data on average hourly wages will also be important. At the same time, the unemployment rate is expected to remain unchanged at 3.9%, which remains close to its historic low.
The U.S. labor market is strong and remains resilient, but it is experiencing a slowdown, said Nick Bunker, director of North American economic research at Indeed. “Demand for workers continues to moderate, although it remains high,” he told Seeking Alpha in an interview. “It is therefore a labor market which is still quite strong, but which increasingly presents a better balance between demand and supply of workers.”
In the comment: Analyst Logan Kane believes the job market will weaken significantly. “While unemployment claims are of little concern, job openings are declining rapidly, indicating a continued and substantial slowdown in hiring,” he said. Other signs of weakening include the pattern of hiring over the past year, which has been largely limited to specific sectors of the economy, such as leisure and hospitality, healthcare and the public sector . (79 comments)
Divergence
The European Central Bank cut its key rates by 25 basis points on Thursday, as expected, its first cut in almost five years amid signs of easing price pressures. It is the third major central bank to embark on a new round of easing, following the Swiss National Bank’s decision in March and the Bank of Canada’s reduction on Wednesday. Will the Federal Reserve fall behind? Some US lawmakers are speaking out, such as Senator Elizabeth Warren (D-MA), who urged the central bank to follow in the ECB’s footsteps. “Jerome Powell needs to adapt to the program,” she wrote on X. (10 comments)
attach your belt
GameStop (GME) seemingly pulled the rug out from under Keith Gill, known online as Roaring Kitty, just before the influential trader broadcast his first YouTube livestream in three years. Gill helped propel the stock this week with a series of trades reported in the hundreds of millions, with shares more than doubling in value and trading at $62/share for the first time since the meme craze of 2021. GameStop also wanted to take advantage of its popularity, with an early publication of its results and a plan to sell 75 million new shares. At the time of writing this article, GME is 10% discount at $42/share. (39 comments)
Pay over time
“Buy now, pay later” options continue to expand as demand continues to rise for such offerings in an era of higher interest rates and inflation. Affirm Holdings (AFRM) has just launched Pay in 2 and Pay in 30 in a bid to attract more customers who pay bi-weekly or monthly. “Adding options…allows us to better meet individual consumer preferences, allowing them to pay for small or large purchases that best suit their budget,” said Vishal Kapoor, head of product at Affirm. “I like BNPL, but not this stock,” writes Michael Wiggins De Oliveira, head of the SA Investing Group, in a recent article on the sector.
