US job growth blew past estimates in May while unemployment also edged up, according to government data released Friday, underscoring the labor market’s resilience as policymakers seek to cool the economy gradually.
The world’s biggest economy added 272,000 jobs last month, up from a revised 165,000 in April, said the Department of Labor.
This was significantly more than the 185,000 increase that analysts predicted according to Briefing.com. It was also the highest level since December 2023.
The jobless rate, meanwhile, crept up from 3.9 percent to 4.0 percent, the department added.
This is still a relatively low level compared with recent decades, painting a picture of a still-healthy labor market.
But the hotter than expected figures could complicate the Federal Reserve’s calculus as it weighs the right time to lower interest rates.
The US central bank has held rates at a 23-year high in recent months, in hopes of easing demand to rein in inflation sustainably.
With the economy still adding more jobs than anticipated, analysts expect the Fed to hold off rate cuts for a while longer.
– Fed patience? –
In May, sectors such as health care and government, as well as leisure and hospitality, saw employment continuing to trend up, the Labor Department report said.
While average hourly earnings rose by 0.4 percent on-month, the year-on-year increase of 4.1 percent remains similar to the level in recent months.
Improvement in labor participation, helped by immigration numbers, have helped support net job gains, said Julia Pollak, chief economist at employment platform ZipRecruiter.
She added in a note on Friday: “A strong job market with persistently high wage growth was not what investors had hoped for.”
A robust jobs market has allowed consumers to continue spending even in the face of elevated interest rates — giving the US economy a boost.
But as households draw down on their savings and borrowing becomes more expensive for individuals and businesses, the situation could change.
Fed policymakers are watching for signs that the economy is cooling.
But futures traders widely expect officials to hold rates steady until around September, according to CME Group’s FedWatch Tool.
The Fed’s next policy meeting will take place on Tuesday and Wednesday.
