Source: AFP
U.S. employment growth beat earlier estimates in May, while unemployment also rose, according to government data released Friday, underscoring the resilience of the labor market as policymakers seek to gradually cool the economy.
The world’s largest economy added 272,000 jobs last month, up from a revised 165,000 in April, according to the Labor Department.
That was significantly larger than the 185,000 increase that analysts had expected, according to Briefing.com. It was also the highest level since December 2023.
The unemployment rate, meanwhile, rose from 3.9 percent to 4.0 percent, the ministry added.
This is still a relatively low level compared to recent decades, giving a picture of a healthy labor market.
However, hotter-than-expected data could complicate the Federal Reserve’s calculus as it weighs the right time to cut interest rates.
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The US central bank has kept interest rates at a 23-year high in recent months, hoping to ease demand to contain inflation sustainably.
As the economy continues to add more jobs than expected, analysts expect the Fed to hold off on 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 continue to grow, according to the Labor Department report.
While average hourly earnings rose 0.4 percent month-over-month, the annual increase of 4.1 percent remains similar to the level of recent months.
An improvement in labor participation, aided by immigration numbers, helped support net job gains, said Julia Pollack, chief economist at jobs platform ZipRecruiter.
He added in a note on Friday: “A strong labor market with persistently high wage growth was not what investors were hoping for.”
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A strong labor market has allowed consumers to continue spending even in the face of rising interest rates – giving the US economy a boost.
But as households spend 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.
Source: AFP