The markets started off in the red on this jobs Friday. Despite the stronger than expected employment numbers, the Dow fell 82 points and touched a one month low. Shortly thereafter, the markets attempted to rebound but have not completely wiped out those losses.
John Canally, Vice President of LPL Financial, believes that we're in a Goldilocks economy. "The May employment report was not strong enough to prompt the Federal Reserve to begin hiking rates sooner than September 2015, but it was also not weak enough to convince markets that the weakness in the economy was anything other than 'transitory'."
U.S. payrolls added 280,000 jobs in May, suggesting some momentum after the beginning of this year.
Canally believes that we would need to return to a pace of 250-275k per month and stay there for several months to make the Fed reasonably confident that inflation was heading back higher to 2%.
"The report supports our view that the economy will rebound in Q2 and that the Fed is on track to raise rates by late 2015."