The May jobs report released Friday showed the US economy remains strong with more than 300,000 jobs created last month, while the unemployment rate rose to 3.7%.
The US economy added 339,000 nonfarm payroll jobs last month, data from the Bureau of Labor Statistics showed Friday. This marks the 14th-straight month that job creation came in above what Wall Street economists had expected and the largest monthly increase since January.
Friday’s report comes less than two weeks before the Federal Reserve’s next policy meeting, with investors still expecting the central bank will pause its rate hiking campaign despite the labor market’s surprising resilience. Data from the CME Group on Friday showed there remains a 70% chance the Fed leaves rate unchanged in a range of 5%-5.25%.
We do not believe today’s report was strong enough to meet the bar for the Fed to hike in June, but raises the risk that the Fed could hike in July,” Morgan Stanley’s chief US economist Ellen Zetner wrote in a note to clients on Friday. “While payroll numbers were undeniably strong, the FOMC will also be focused on the unemployment rate.”
Here are the key numbers from the report compared to estimates from Bloomberg:
- Nonfarm payrolls: +339,000 vs. +195,000
- Unemployment rate: 3.7% vs. 3.5%
- Average hourly earnings, month-on-month: +0.3% vs. +0.3%
- Average hourly earnings, year-on-year: +4.3% vs. +4.4%
- Average weekly hours worked: 34.3 vs. 34.4
Employment gains for the last two months were revised higher. Updated data revealed 294,000 jobs were created during April, 41,000 more than previously reported. March’s job gains were also revised higher — to 217,000 from 165,000 — making job growth over that two month stretch higher than previously reported by 93,000.
By industry, the largest increases in Friday’s data were seen in business and services which added 64,000 jobs.
In Government, 56,000 jobs were added last month. Health care also drove labor gains with 52,000 job additions in May. Leisure and hospitality added 48,000 jobs, with 33,000 of those roles coming in the food services and drinking places category.
Construction added 25,000 jobs in May, a 7,000 role increase from its 12-month average.
In a statement, President Biden said, “Today is a good day for the American economy and American workers.”
Friday’s jobs report comes as recent strong economic data reports had some economists calling for the Federal Reserve to hike interest rates in June. An upward revision to first-quarter economic growth, an increase in April job openings, and consistently sticky inflation had all weighed on Fed futures markets heading into Friday’s jobs report.
But while the headline nonfarm payroll additions in Friday’s report showed a blowout beat, some economists believe the Fed will consider the increased unemployment rate and slowing wage growth as signs of a slowly cooling economy.
“The household survey painted a different picture, with employment falling and the unemployment rate rising to its highest level since October,” Nancy Vanden Houten and Ryan Sweet at Oxford Economics wrote on Friday. “The conflicting data will give the Fed cover to hold policy steady at its upcoming meeting – a pause that’s been well telegraphed – but a resumption of rate hikes in July is a strong possibility if job growth doesn’t slow significantly in June.”
