Employment in the U.S. exceeded economists' expectations significantly in May, as revealed in a report by the Labor Department on Friday.
The Labor Department reported that non-farm payroll employment jumped by 272,000 jobs in May, following a revised increase of 165,000 jobs in April.
Economists had anticipated a rise of around 185,000 jobs, compared to the initially reported 175,000 jobs for the preceding month.
This substantial job growth was partly driven by a notable increase in the health care and social assistance sector.
The report also highlighted markedly higher job growth in the government and leisure and hospitality sectors after modest increases in the previous month.
In contrast, the Labor Department noted that the unemployment rate inched up to 4.0 percent in May from 3.9 percent in April, contrary to expectations of it remaining steady.
This unexpected increase brought the unemployment rate to its highest point since matching it in January 2022.
The rise in the unemployment rate was due to a decrease of 408,000 persons in household survey employment figures, alongside a reduction of 250,000 in the labor force.
Additionally, the report indicated that average hourly earnings for employees rose by $0.14, or 0.4 percent, to $34.91, with the annual growth rate accelerating to 4.1 percent in May from 4.0 percent in April.
"Although this report is not uniformly strong, on net, it shows a job market that remains quite tight. This implies that the Federal Reserve will likely maintain its current level of rates, as inflation is unlikely to drop back to target given this pace of wage growth," stated Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association.
