US employment rose again in May, while the labor market remained strong and fell short of analysts’ expectations of slower growth amid efforts to cool the economy.
The labor market performed remarkably well despite efforts by regulators to curb demand and curb inflation, with the central bank raising interest rates 10 times since the start of last year.
While higher interest rates are expected to slow the economy as borrowing costs rise, making it more expensive to borrow money for big purchases or business expansion, the latest data could be a problem for policymakers considering pausing interest rate hikes. This is reported by Agence France Presse.
The US Department of Labor said on Friday that the United States added 339,000 jobs last month, topping estimates, and up much more than April’s 294,000 jobs, according to revised data.
At the same time, the unemployment rate rose to 3.7 percent from a historically low level of 3.4 percent.
However, in a positive sign, wage growth has slowed slightly, with average hourly wages up 0.3% from 0.4% in April, according to the report.
“The data shows that job growth continues at a rapid pace, but pressure on wages is not increasing,” said Rubela Farooqi, chief US economist at consulting firm High Frequency Economics.
“Compared to last year, the average hourly wage increased by 4.3 percent,” the Ministry of Labor said.
The ministry added that sectors that saw an increase in jobs included professional and commercial services, health care and construction.
Room to stop being interesting
But even as employment figures were much higher than analysts had expected, Farooqi said the payroll data could give the Fed an opportunity to freeze its policy.
Fed policymakers are due to meet in mid-June, and some senior US central bank officials have signaled this week that they may support dropping another hike at their next meeting.
The key factor is that officials are looking forward to the long-term effects of the rate hike on the entire economy as they decide whether further action is needed.
Of particular concern is that high demand for workers and continued wage growth could contribute to inflation. But if wage growth does not pick up, that could ease the pressure on politicians.
Mortgage Bankers Association chief economist Mike Fratantoni said: “Many Fed officials have proposed keeping interest rates at their next meeting in June, but they are unlikely to cut rates anytime soon. This controversial report supports that approach to some extent.”