US economy adds more jobs than expected in May
The US labour market added more jobs than expected in May, defying previous signs of a slowdown in the economy.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 272,000 non-farm payroll jobs in May, significantly more additions than the 180,000 expected by economists. Meanwhile, the unemployment rate rose to 4% from 3.9% the month prior. May's job additions came in significantly higher than the 165,000 jobs added in April.
The print highlights the difficulty the Federal Reserve faces in determining when to lower interest rates and how quickly. Overall, the economy and labor market have held up, and inflation has remained sticky, building the case for holding rates higher for longer. Yet some cracks have emerged, such as signs of inflation pressuring lower-income consumers and rising household debt.
“They’re really walking a tightrope here,” Robert Sockin, Citi senior global economist, told Yahoo Finance of the central bank. He noted the longer the Fed holds rates steady, the more cracks could develop in the economy.
Wages, considered an important metric for inflation pressures, increased 4.1% year over year, reversing a downward trend in annual gains from the month prior. On a monthly basis, wages increased 0.4%, an increase from the previous month's 0.2% gain.
"To see more confidence that inflation could move lower over time, you'd really like to see the wage numbers look a little lower than we've seen them today," Lauren Goodwin, New York Life Investments economist and chief market strategist, told Yahoo Finance.