The U.S. economy added 272,000 jobs in May, bringing good news for workers but potentially complicating the Federal Reserve’s ongoing crusade against inflation.
The data, published Friday by the Bureau of Labor Statistics, offers a counterpoint to some employment market indicators that had shown signs of slowing as recently as this week. Economists had expected the economy to add 190,000 jobs, according to a Dow Jones survey.
“A long feared substantial slowdown in hiring has yet to show up,” Bankrate Senior Economic Analyst Mark Hamrick said in a statement Friday.
The unemployment rate ticked up to 4% but remains historically low, extending a 30-month streak of unemployment at or below that level. And in another bright spot for workers, average hourly earnings jumped 4.1% in May from the year before, up from a 3.9% annual rate in April.
Friday’s data reinforces expectations that the Federal Reserve will hold off cutting interest rates when it meets next week.
‘Fed members and investors had clearly been hoping for a softer report, which would have raised confidence in the appropriateness of a July or September rate cut,’ ZipRecruiter Chief Economist Julia Pollak said in a statement Friday. ‘Instead, economic data has been mixed.’
The central bank’s next decision on rates is due Wednesday afternoon, hours after a fresh Consumer Price Index offers another inflation snapshot.
Despite last month’s hiring gains, job growth overall this year has cooled. In the run-up to Friday’s report, many economists said the steady slowdown looked more like normalization toward pre-pandemic hiring trends than a sign of an imminent recession.
On Wednesday, payroll processor ADP found private employers added just 152,000 roles in May, far fewer than expected. And earlier this week, the BLS reported that the ratio of unemployed workers to job openings had climbed back to the level seen just before the outbreak of the Covid pandemic.
But the change in that figure is primarily a result of firms deciding they don’t need to fill as many roles, and not because of a surge in unemployment, analysts say.