Employment Data Summary - In May, the U.S. added 139,000 non-farm jobs, slightly exceeding the expectation of 130,000[2] - Job growth was concentrated in three sectors: education and healthcare services (+87,000), leisure and hospitality (+48,000), and finance (+13,000)[2] - The unemployment rate remained steady at 4.2%, with a slight increase in the labor force participation rate from 62.6% to 62.4%[4] Wage Growth Insights - Hourly wage growth was 0.4% month-on-month, surpassing the expected 0.3%, and year-on-year growth was 3.9%, up from a revised 3.8%[3] - The average weekly hours worked remained at 34.3 hours, indicating stable labor income growth[3] - Wage growth is crucial for protecting consumer purchasing power, especially for low- and middle-income groups, amid inflation concerns[5] Market Reactions and Economic Outlook - Market expectations for interest rate cuts have cooled, with the probability of a September rate cut dropping from 61.3% to 51.8%[3] - The anticipated number of rate cuts for the year decreased from 2.1 to 1.8, and the year-end policy rate expectation rose from 3.795% to 3.886%[3] - Following the report, U.S. stock indices rose, with the Dow Jones up 1.05% and the Nasdaq up 1.2%, indicating a rebound in risk appetite[3]

Group 1: Employment Growth - The February non-farm employment growth is expected to slow to 135,000 jobs, down from 143,000 in January, but still considered healthy [4][3] - Private sector employment is projected to increase by 120,000 jobs, slightly above January's 111,000, while government employment may be affected by hiring freezes [5][4] - The report indicates that uncertainties related to government funding and potential cuts could impact private sector employment, particularly in professional services [5][6] Group 2: Unemployment Rate - The unemployment rate is expected to remain stable at 4.1% in February, consistent with the recent range of 4.0%-4.2% [6][8] - The report predicts that the labor market will soften, leading to a potential rise in the unemployment rate to around 5% by mid-year due to weak hiring [7][8] - Federal government layoffs, estimated at around 300,000 positions, may start to reflect in labor market data from March/April, contributing to upward pressure on the unemployment rate [8][6] Group 3: Wage Growth - Average hourly earnings are expected to moderate to a growth rate of 0.3% in February, down from a strong 0.5% in January [10][11] - The report suggests that the labor market's easing will continue to exert downward pressure on wage growth throughout the year [11][12] - Temporary factors, such as seasonal adjustments and reduced working hours, may have influenced January's strong wage growth [10][11] Group 4: Monetary Policy Outlook - The report indicates that weak growth data may lead to expectations of further interest rate cuts by the Federal Reserve, with a baseline scenario of a 125 basis point cut this year [2][13] - The anticipated first rate cut is expected to occur in May, as the labor market transitions from a relatively healthy state to a significant slowdown [13][12] - Recent declines in U.S. Treasury yields, particularly in the 10-year yield, reflect the market's response to softening growth expectations [12][13]