The yield on the benchmark 10-year Treasury broke the 2.4% level for the first time since last October as a better than expected May jobs report stoked Federal Reserve rate hike fears. Deloitte LLP CFO and Global COO Frank Friedman, however, remained unperturbed. ‘From a business perspective I don’t think it matters that much’ said Friedman. ‘Businesses have been planning for a rate increase for 12 to 24 months. They know it’s going to happen. When it happens is not so significant because businesses believe it will.’ The U.S. economy added 280,000 jobs in May, the Labor Department said Friday, further proof a weak March number was an aberration in a soft first quarter. Economists had expected the economy to add 210,000 jobs in May. April’s jobs number was revised down to 221,000 from 223,000. ‘We are tracking for 2.6 million jobs if you just assume the average of 217,000 and compared to 3 million jobs last year,’ said Friedman. ‘It may not be better than last year but it’s certainly better than any time since the recession. I think businesses are relatively optimistic.’ Meanwhile, the unemployment rate ticked up to 5.5% from 5.4%. Hourly earnings rose 0.3% in May, adding to a 2.3% annual rate. The labor force participation rate increased to 62.9% from 62.8%. While wages did increase in May, Friedman does not advise employees to storm into their human resources manager and demand raises just yet. ‘At some point the resources that you need are going to have to be limited. And when they get limited wages go up,’ says Friedman. ‘I don’t think the broad economy has seen that. The advantage has been that there has been a real wage increase because oil prices have gone down so much.’ Friedman says the U.S. remains the strongest economy he has seen in his travels. However, he is also seeing growth in Europe and Japan firsthand, something the markets have already recognized this year. ‘They were late to the table, and Europe in particular, did not employ TARP. They did not do the buyback of the Treasuries as our Fed did. So they were pretty late to the party. But it is getting stronger.’
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