: ‘The upshot is that the Fed can still afford to skip a rate hike in June’ — economists react to May jobs report

And read: Traders price in increased risk of June Fed rate hike after May jobs data

Below are some initial reactions from economists and other analysts, including their views on what it means for the Federal Reserve as the central bank could pause on its interest-rate hikes. U.S. stocks
SPX,
+1.13%

DJIA,
+1.46%
were gaining following the data on nonfarm payrolls, also called NFP.

• “The bigger-than-expected 339,000 increase in non-farm payroll employment in May will dominate the headlines, but the employment report was not all positive – with a big drop in the household survey measure of employment driving the unemployment rate up to a seven-month high of 3.7% and average weekly hours worked edging down to a three-year low. … The upshot is that the Fed can still afford to skip a rate hike in June.” — Paul Ashworth, chief North America economist at Capital Economics, in a note

• “Lots of jobs, lower wage growth. Seems great, but keep in mind that the household report shows job loss. If we put the household and employer survey together, we are right around expectations. … The Fed needs to chill and hold.” — Betsey Stevenson, economics professor at the University of Michigan and a former Obama White House economist, in a couple of tweets

• “There was some disappointment in the household figures, with the unemployment rate ticking up a bit, but it’s hard to argue that the labor market isn’t in pretty healthy shape and seems to be very resilient. So I think I would advise lots of caution about the tendency to want to pause or skip a rate increase. I think I’d go for another 25 basis points now.” — Charles Plosser, visiting fellow at Stanford University’s Hoover Institution and former Philadelphia Federal Reserve president, in a CNBC interview

• “From the Fed’s perspective, we have heard from many voting members of the FOMC that they are inclined to skip tightening in June but could resume tightening in July. Today’s strong employment readings support that action, but key will be the CPI report due out on June 13 — the first day of the Fed’s two-day meeting.” — Kathy Bostjancic, chief economist at Nationwide, in a note

• “The topline NFP number may scare the Fed into thinking that they need to hike again, but the household survey details and the continued, gradual slowing in [average hourly earnings] suggests that the pause/skip camp is going to win out here.” — Thomas Simons, U.S. economist at Jefferies, in a note

• “It’s hard to say which is the bigger surprise — the huge, unexpected rise in payrolls or the equally huge, unexpected rise in the unemployment rate. From the Fed’s perspective, the rise in unemployment coupled with the drop in average hourly earnings should outweigh the shock of another huge job gain. After all, the weaker numbers stand in support of a pause they were leaning toward anyway.” — Chris Low, chief economist at FHN Financial, in a note