Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni issued commentary describing key takeaways from the latest employment numbers released by the U.S. Bureau of Labor Statistics on June 5.
Fratantoni observed May employment numbers indicated “much stronger job growth than had been anticipated.” However, growth among lower-paid employment sectors outpaced that of higher-paid sectors, causing a slowdown in wage growth to 3.4 percent overall.
Taking the April and May job numbers together, he noted “wage growth is running below the pace of inflation, putting a strain on household budgets.”
As a result, MBA believes it is likely the Federal Reserve’s next move with respect to the federal funds target rate will be an increase.
“While the job market is not showing broad-based strength, overall, there is surprising resilience,” Fratantoni said. “Meanwhile, inflation is too high. MBA continues to anticipate that the Fed’s next move will be a rate hike, and that means mortgage rates are unlikely to drop anytime soon.”
According to the report, the most notable job gains in May were in health care, leisure and hospitality and local government, accounting for 93 percent of the approximately 172,000 nonfarm payroll positions added during the month. By contrast, the financial sector lost 22,000 jobs in May and has lost 107,000 jobs since May of last year.
Employment in other major industries – such as construction, manufacturing, wholesale trade, retail trade, information and professional and business services – saw relatively little change in May, per the report.
Combined with April’s revised non-farm payroll growth of more than 179,000 jobs, the three-month average growth in this area was 188,000.
The unemployment rate and the labor force participation remained unchanged in May at 4.3 percent and 61.8 percent, respectively.