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U.S. added more jobs than anticipated in May

Published 06/07/2024, 08:23 AM
Updated 06/07/2024, 08:35 AM
© Reuters

Investing.com - The U.S. economy added more jobs than expected last month, undermining expectations of a cooling labor market, potentially impacting how the Federal Reserve approaches potential interest rate cuts this year.

Nonfarm payrolls rose by 272,000 in May, surging from April’s revised lower 165,000 release, according to data from the Labor Department's Bureau of Labor Statistics. Economists had called for a reading of 182,000.

This was higher than the average monthly gain of 232,000 over the prior 12 months. 

Employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services.

Average hourly earnings grew by 0.4% month-on-month, rising from 0.2% in April and above projections of 0.3%. The unemployment rate, meanwhile, rose to 4.0%, above the expected 3.9%. 

"Just a strong report," said analysts at Evercore ISI, in a note. "Almost all metrics were solid to robust as jobs soared, hourly earnings jumped, but the unemployment rate, household employment and labor force plunged."

Cooling labor demand had been a key goal of the rate tightening cycle by the Fed, with policymakers hoping that the softening may alleviate upward pressure on inflation.

There had been some signs earlier this week that the U.S. jobs market had been cooling, with weekly jobless claims coming in slightly above last week's upwardly revised 221,000 on Thursday, and private payrolls as well as jobs opening below expectations.

The U.S. Federal Reserve meets next week, and is widely expected to stand pat as the policymakers look for more information as to the strength of the economy.

Markets had priced in nearly 50 basis points of Fed rate cuts this year prior to this release, with the first reduction seen in September.

 

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