The Labor Department's latest employment report has numbers that both optimists and pessimists can love. And love to hate.
Unemployment at a 16-year-low of 4.3% in May? That looks like good news for the U.S. economy. Job gains that were 22% less than economists expected, coupled with a cut of 66,000 to growth estimates for the previous two months? Not so much.
So what's the bottom line for a U.S. central bank that wants to move interest rates closer to historical norms from a low near zero? The data may not derail a widely expected June hike of 25 basis points, but it won't make backing the move any easier for members of the Federal Reserve's monetary policy committee who are meeting in about two weeks.
"At this point, June is still a lock," Joseph Song, a Bank of America economist, said in a telephone interview. "If they were willing to overlook the weak data since March -- weak inflation and tenuous consumer data -- I think they're going to be willing to overlook one weak employment report."
Still, reports on inflation and and retail sales are scheduled on the second day of the Fed's June meeting and if they, too, prove lackluster, "it does raise a risk that they'll have to consider whether or not they're going to go in June," Song said.
While the May jobs data alone -- which showed just 138,000 new positions -- could be dismissed as transitory, it looks more ominous when combined with other recent economic indicators, Song said. Those include lower-than-expected retail sales in April, a disappointing automobile market and core inflation of 1.5%, stubbornly below the Fed's target of 2%.
