What's going on?

We had reported on�recent signs that a summer interest rate increase in the US had become more likely (such as increasing consumer spending), but data on Friday went in a different direction. It showed that far fewer workers got hired in May than expected, making an interest rate rise by the US Federal Reserve (�the Fed�) far less likely this summer.

What does this mean?

It was the weakest month for job growth in more than five years and it confirmed a weakening trend for the US employment situation: job growth has declined for 3 successive months now. Also, the data showed that fewer workers were hired in March and April than initially reported (monthly jobs data is often revised over time). All in all, it was pretty bad news.

Why should I care?

For the market: The decreased likelihood of an interest rate rise immediately left its mark. The Fed had said that three things had to happen for it to raise its interest rate at its June or July meeting: 1) economic growth had to improve (it has), 2) inflation had to increase (it seemingly has) and 3) the employment situation had to continue to strengthen (which it hasn�t!). As investors� expectations for a summer interest rate rise declined, the value of the US dollar went down (lower interest rates usually make a currency worth less – click here for an explanation) and commodities, like gold, went up (amongst other things).

For you personally: Your lifestyle might become less affordable. As we�ve reported before, inflation is likely on the rise in the US (and elsewhere), i.e. things are probably going to get more expensive. But, if job growth is weak, then there won�t be much pressure on employers to raise wages (think: your company doesn�t have to pay you more if there are potential workers on the sidelines ready to take your job). If wage growth doesn�t improve and inflation increases, then it�s going to get more difficult to afford your current lifestyle.