Most job gains were in healthcare (84,000), restaurants, hotels and entertainment (42,000) and government positions (43,000)
Employers added 272,000 jobs in May, according to government data released yesterday, much higher than the predicted 190,000. The number surpasses the downward revision of 165,000 jobs in April.
The surprising job growth comes as the country is witnessing a slowing economy as consumer spending declines. But analysts predict that the payroll gains indicate the Fed may soon lower interest rates.
Most job gains were in healthcare (84,000), restaurants, hotels and entertainment (42,000) and government positions (43,000).
However, the unemployment rate rose slightly to 4% from 3.9%, ending its 27-month streak of staying below 4%, the longest since the late 1960s. Hourly wages increased by 4.1% year-over-year.
Economists are confused
Strong job growth and increases in unemployment and hourly wages have baffled economists. They say the mixed data signals that the job market is stabilizing post-pandemic.
Some economists also say the report suggests the economy continues to be resilient, and many believe that the Fed will not cut rates before September.
President Joe Biden cited the May jobs report data as a sign of economic health, while former president Donald Trump criticized Biden’s policies, claiming they caused an inflation surge. Trump further added that illegal immigration aided in price rise, a claim economists reject.
Overall, the sturdy jobs report adds complexity to bringing down inflation to the Fed’s 2% target. Annual inflation has declined to 2.7% from above 7% in 2022.