The US job market keeps on holding up. A hundred and thirty nine thousand jobs added in May, beating expectations and extending its steady streak despite inflation and policy headwinds. For more, we're bringing out Jennifer Lee, senior economist and managing director at BMO Capital Markets. Jennifer, it's good to see you. So, on that jobs report, Jennifer, I saw some economists today, they read through the report, Jennifer, and they kind of characterized it to their clients as this. They said, you know, to them, more evidence of a labor market that, okay, it's cooling but not crashing. Is that how you see it?

That's a great way of putting it. And thank you very much by the way for having me on. My automatic reaction, the first two words that came out of my mouth were, not bad. Not bad. I think we were sort of thrown by, you know, what we saw from the ADP with that very low figure. So, I think we were, everyone was quite nervous. The market was quite nervous, but again, 139,000 steady jobless rate of 1.2%, gains throughout other different sectors like construction, leisure, hospitality, education, and health care for example. So we're seeing still steady gains in various sectors. Other sectors are cutting back, obviously, but overall, not a bad report. And I'm going to say that the one thing that I thought was actually the most positive news out of that was the average hourly earnings report of .4% or the increase of .4%, above expectations, the highest in a few months. And it's good news for the average worker. At least they have a little something, you know, a little extra money in their pocket for when they're ready to spend. Not great news for employers because that means that they're shelling out a little bit more for wages and salaries, but at the same time, I think it's good support for the US consumer, which is, you know, the biggest underpinning, I guess, for the overall US economy.

What does that number imply, if anything, Jen for inflation more broadly, right? Does that piece tend to be sort of a leading or lagging indicator for bigger inflation numbers that we know the Fed is watching really closely?

Yeah, so I think that we sort of debate that around here as well. You know, I mean, typically when you have higher earnings, you know, or wages, you know, it tends to be inflationary. But I think that's sort of the, you know, the normal assumption that people are going to take their money and start spending like crazy, but I don't think that's happening. We certainly haven't been seeing that organically, I guess, is the word that I'm looking for right now, you know, everyone, as long as they have the money. And I think people of course, were spending earlier in the year, just in advance of all the feared tariffs, the feared inflation, you know, higher prices for all these goods. You might, you know, there's a fear of empty shelves ahead of the holidays, for example, which is just six months away. So there's a lot of, again, pulled forward spending, but I don't think in this case it's going to be too inflationary from the consumer's perspective, because I think they're just going to put aside a little bit for a rainy day. We saw that in the April personal spending and income report where they pushed up the saving rate a little bit, and that's not a bad thing. As long as they're in a position to spend when they want to spend, I think that is the most positive aspect of all of this.

Jennifer, what do you think J. Powell and the Fed made of this jobs report today?

I feel very, I have, I feel very sorry for the Fed chair. I mean, no matter what, I think he's in a very tough spot. You know, I mean, great news that the US economy is still growing. Great news that the job market is still, the market is still turning out jobs at a steady-ish slowing, albeit still slowing rate. But yet, you know, there's that pressure, that pressure from the Oval Office to cut, you know, from calling him now to late, too late Powell, or something like that, which anyway, I think it puts him in a very tough spot, but I think all of the Fed members of the government Council, I believe that they're all on the same page, on the same page saying that they are going to be patient. The minutes from that last meeting stated that they were all, felt that they were well-positioned to wait and to be patient, and that seems to be sort of like the theme that we're seeing playing out. You know, like the ECB yesterday, cut rates 25 basis points and sounded a little bit less dovish. You know, with Christine Lagarde saying, we are in a good place. Everything that we've done so far, with the rates the way they are right now, I think we're in a good place to sort of take whatever's going to be coming toward us.