The unemployment rate was at 3.7% versus the 3.5% estimate, just above the lowest level since 1969.
The U.S. economy continued to add jobs in May, with nonfarm payrolls rising more than expected despite multiple headwinds, the Labor Department said on Friday.
Public and private payrolls rose by 339,000 for the month, better than the Dow Jones estimate of 190,000 and marking the 29th straight month of positive job growth.
The jobless rate rose to 3.7% in May against estimates of 3.5%, even as the labor force participation rate was unchanged. The unemployment rate was the highest since October 2022, although it remains near the lowest since 1969.
Average hourly earnings, a key gauge of inflation, rose 0.3% for the month, which was in line with expectations. On a year-over-year basis, wages rose 4.3%, which was 0.1 percentage point below the estimate. Average weekly work decreased by 0.1 hour to 34.3 hours.
Markets reacted positively to the report, with futures tied with the Dow Jones industrial average around 200 points. Bond yields also rose.
May’s jump in hiring was almost exactly on par with the 12-month average of 341,000 in a labor market that has held up remarkably well in a slowing economy.
Professional and business services led job creation for the month with a net 64,000 new hires. Government helped boost the numbers by adding 56,000 jobs, while health care contributed 52,000.
Other notable gainers were leisure and hospitality activities (48,000), construction (25,000) and transportation and storage (24,000).
May’s jobs numbers come at a difficult time for the economy, with many experts still expecting a recession later this year or early 2024.
Recent data has shown that consumers are continuing to spend, although they are dipping into savings and increasingly using credit cards to pay for purchases. A resilient labor market also helped support spending, with jobs rising again above 10 million in April as employers continued to struggle to fill vacancies.
A major potential headache appears to have been eliminated as warring factions in Washington this week reached an agreement on the debt ceiling. A deal is on its way to President Joe Biden’s desk for signature after passing the House and Senate this week.
However, there are other issues ahead.
The Federal Reserve has raised benchmark interest rates 10 times since March 2022 in an effort to combat unabated inflation. In recent days, some policymakers have signaled a willingness to take a break in June from consecutive hikes as they try to see what impact policy tightening is having on the economy.
Other data have shown that the manufacturing sector of the economy is shrinking, although the much larger services sector has maintained its expansion. The ISM manufacturing index released on Thursday also showed prices easing, a positive sign for the Fed.
