The US economy added far more jobs than expected in May and wage growth was brisk, Friday’s hotly-anticipated nonfarm payrolls report showed.

The headline print, at 272,000, blew past estimates. Consensus was 180,000.

In the days ahead of the release, a string of data including another drop in job openings, a mixed read on ADP private hiring and an uptick in jobless claims, suggested the labor market was cooling. You can toss that narrative aside. For now anyway.

Thanks to the big overshoot on May’s headline, the three-month moving average for NFP moved up from April, to 249,000.

Revisions subtracted 5,000 from March’s headline and 10,000 and April’s. But 15,000 fewer jobs across those two months doesn’t offset the ~100,000 upside surprise on the May headline. Private payrolls rose 229,000 last month, the second highest in a year.

There were at least two big banks still clinging to a July start for Fed cuts. They’ll be compelled to push those calls back to September now.

Job gains were led by healthcare and government. Some might suggest that’s indicative of a softer “underlying” jobs market, but I don’t think that narrative’s likely to carry the day. Leisure and hospitality added 42,000 jobs, professional services 32,000 and retail 13,000.

Average hourly earnings rose 0.4% MoM, a blow to the soft landing story and an upside risk to supercore inflation. Notwithstanding evidence of normalization in the JOLTS series, the labor market’s tight. Economists were looking for a 0.3% month-to-month gain on the AHE print. MoM readings for March and April were both revised higher.

On a YoY basis, earnings growth was 4.1% in May, two tenths faster than expected.

The household survey admitted of more nuance, and you can generally expect the bear/recession crowd to key on it. The unemployment rate rose to 4%, for example, the first four-handle reading since January of 2022. We’re now 0.6ppt above the cycle lows.

Worryingly in that context, the participation rate ticked lower. But that’s probably seasonality. The 20-24 year-old cohort saw a big decline.

The employment level in the household survey showed a 408,000 drop, the second largest since the jobs apocalypse that accompanied the onset of the pandemic.

Remember: Divergences between the household and establishment surveys are fairly common. While doomsayers like to pretend the disparity’s a harbinger, the historical record suggests otherwise, at least to the extent “disagreement” between the surveys doesn’t always, or even usually, presage downward revisions to the NFP headlines.

I suppose you could make the case that between the composition of the job gains (i.e., healthcare and government), the uptick in the jobless rate and the household survey “canary,” the release didn’t actually deserve the barnburner label media outlets will almost invariably apply.

That said, it’ll be hard for traders (and Fed officials) to get past the big overshoot on the headline and the warm wage readings. Expect Fed rate-cut pricing to reverse course. Again.