Private-sector job growth in the US remained modest in May, according to this morning’s update of the ADP Employment Report. Although companies added slightly more workers last month vs. April, the monthly increase—173,000 175,000—was still close to the slowest advance on a month-to-month basis over the last three years. Two other employment releases—the government’s jobless claims data and Challenger Gray’s job cuts report—offer more encouraging data. Overall, it’s fair to say that the latest employment figures offer an upbeat profile, but with several caveats.
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The Federal Reserve is considering another rate hike, perhaps as early as this month, but the Treasury market’s estimate of future inflation signals skepticism from the vantage of government bond traders. The implied forecast, based on the yield spread between nominal and inflation-indexed Treasury yields, is inching lower again. The recent decline suggests that the odds for squeezing monetary policy at the central bank’s June 14-15 FOMC meeting may be lower than hawkish Fed comments of late imply.
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