The stronger-than-expected employment report for the month caps a run of data that leaves the economy poised for a second-quarter bounceThe first day of June brought a fresh round of data that point to stronger growth ahead for the U.S. economy. Reports on jobs, income, and factory-sector sentiment all signal that the inventory downdraft of the 2006 fourth quarter and 2007 first quarter has reached an end.
We still aren't out of the woods with housing, as suggested by a weak pending home sales report for April, but the removal of the inventory downdraft should allow gross-domestic-product growth to bounce above 3% in the second quarter. The prospect of a second-quarter bounce in growth, along with persistent signs of inflation, will keep the Federal Reserve on its toes in the coming months.
The key report on June 1 was the U.S. jobs report for May. Nonfarm payrolls rose 157,000 in the month, from a revised 80,000 in April (from 88,000 initially), while the 177,000 surge in March was revised down slightly to 175,000, to leave a net two-month revision of –10,000. The unemployment rate held at 4.5%. Average hourly earnings rose 0.3%. The workweek expanded to 33.9 hours from 33.8.
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