The positive surprises in the labor market just keep on coming.
Job creation in the U.S. continues to defy expectations.
Case in point: last week’s blowout jobs report for May. The chart shows that actual jobs created (non-farm payrolls) have now outpaced economists’ estimates for 14 straight months. That handily beats the previous streak of just five months.
U.S. Non-Farm Payroll
Other noteworthy takeaways on the jobs front:
● Last month’s growth was widespread—with most industries (including health care, hospitality, and construction) adding jobs.
● The workforce’s share of people aged 25-54 has risen to its highest level since 2007.
● The U.S. economy hasn’t experienced a month of job losses since December 2020.
Our view for some time has been that the strength of the consumer—remember that consumer spending represents two-thirds of U.S. economic activity—would largely outweigh both negative economic data elsewhere and the pessimistic tone of media reports about the economy.
That view is being supported by this trend of stronger-than-anticipated job growth, as well as other developments. We believe it supports the case for holding equities and higher-yielding fixed-income securities rather than moving to cash. For example, in our view, the market rally in response to last week’s jobs report suggests that investors are increasingly viewing strong growth positively—rather than as a bad omen of more Fed rate hikes and higher interest rates.
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This commentary is written by Horizon Investments’ asset management team.
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