EXCLUSIVE: New York Stock Exchange Senior Market Strategist Michael Reinking said the May jobs report gave Wall Street a "sigh of relief" Friday as the market rallied just below all-time highs following the U.S. economy reporting 559,000 jobs in May —missing expectations — and a decline in the unemployment rate.
"There is a little bit of something for everybody in this jobs report," Reinking told FOX Business. "It shows this economy is continuing to improve, but it’s not overly hot where it is going to force any action by the federal reserve preemptively."
Reinking admitted that "the street was expecting the number to be a little hotter" but said "nothing sub-1 million was going to force the Fed’s hand."
The Labor Department announced Friday that employers added 559,000 jobs in May, missing the addition of 650,000 jobs that analysts surveyed by Refinitiv were expecting. The unemployment rate, though, declined 0.3 percentage points to 5.8% — the lowest since the pandemic caused businesses to shut their doors in March 2020.
Despite the gains, the U.S. economy has 7.6 million, or 5%, fewer workers from its February 2020 pre-pandemic level.
Last month, the U.S. economy heavily missed expectations, adding just 266,000 new jobs in April, with the unemployment rate rising unexpectedly to 6.1%. Economists had expected the report to show unemployment falling to 5.8%, with 978,000 jobs created.
But the White House, before the jobs numbers came out Friday, said it is not putting too much weight on any one piece of data and is instead focusing on overall economic trends, which it says point to substantial economic progress.
The numbers came out as part of two surveys. The current population survey is focused on the unemployment rate and covers the period between May 9 and May 15. The second survey is a survey of employers, asking how many jobs are in the economy. That survey covers the pay period that includes May 12.
A White House official stressed how rapidly things changed with regard to the COVID-19 pandemic in the month of May – referring to the latest Centers for Disease Control and Prevention mask guidance, which was released May 13, and most adults becoming fully eligible for coronavirus vaccinations.
The CDC’s guidance says fully vaccinated individuals are not required to wear masks indoors or outdoors, or physically distance. The CDC, though, still advises that fully vaccinated individuals wear masks while in crowded indoor settings, such as while riding public transportation and in hospitals, prisons and homeless shelters.
A White House official also told FOX Business that vaccinations are strongly associated with job creation and said that while some states expanded vaccination eligibility to all adults in March, all adults did not become eligible until mid-April. The official said that timeline would have had most adults fully vaccinated by May 24 – a period not covered in the jobs report.
When asked about the White House’s comments Friday, Reinking agreed that, right now, "there are a lot of headwinds holding back the labor market."
"Both sides can cherry pick whatever they want from these numbers, but it is going to take some time for some of the headwinds to play out," Reinking said. "These factors will be with us for the next couple of months, and these factors will play out over the summer."
As for the Federal Reserve, Reinking said Friday’s jobs report provided it a "very Goldilocks scenario."
"It allows them to continue to move in a very measured pace, and in that, it seems that the markets are going to get a tranquil taper, as opposed to a taper tantrum, as we saw in 2013," Reinking said.
Reinking pointed to Federal Reserve Bank of New York President John Williams’ comments Thursday, in which he said he would like to see the U.S. economy make more progress before pulling back on its stimulus.
"We’re still quite a ways off from maintaining the substantial further progress we’re really looking for in terms of adjustments to our asset purchase program," Williams told Yahoo Finance in an interview, while adding that the Fed should be "planning ahead."
Reinking said he expects Federal Reserve Chairman Jerome Powell to "adopt the same messaging and discuss what our plans are as the economy continues to improve as we expect."
"While it’s not a large number for the market to digest, it send a signal that the Fed is getting more comfortable," Reinking said, adding again that it "sends a signal to the market."
Reinking, looking ahead, set his sights on rising wages, which he said could "potentially ruffle the feathers of inflation hawks."
"That piece of the equation — rising wages — is not transitory, that’s pretty sticky," he said. "With wages rising, that can ultimately pressure companies and force them to raise prices, which feeds this inflation argument."
He added: "I think this is the one piece to keep an eye on."
Reinking said that while inflation expectations have come down since the beginning of May, the rising wages "reintroduces the risk that inflation is not necessarily transitory."
As for the markets, U.S. stocks rose in early trading Friday as traders digested the May jobs report and climbing commodity prices.
The Dow Jones Industrial Average rose by 115 points, or 0.33%, while the S&P 500 and Nasdaq 100 edged up 0.53% and 0.77%, respectively.
"You’re seeing kind of a relief rally," Reinking said.