Job Creation in the United States Remains Robust Despite Rising Prices and Borrowing Costs

Job creation in the United States remained robust last month, despite rising prices and a sharp rise in borrowing costs weighing on the economy.

Employers added 339,000 jobs, but the unemployment rate rose to 3.7% from an unusually low 3.4% in April.

The gains were far larger than expected, continuing a hiring streak that surprised economists.

Analysts expect hiring to slow as the US central bank raises interest rates in an attempt to rein in rising prices.

But payrolls have remained resilient, raising hopes the economy will avoid a painful recession, while sparking debate over whether the Federal Reserve will need to take more aggressive action to rein in inflation.

Inflation, the rate at which prices rise, was 4.9% in the United States in April.

Although it was the lowest in about two years, it remained more than double the 2% rate that the bank considers healthy.

Expectations as to what Friday’s report might mean for interest rates in the months ahead were mixed.

“This is the weirdest jobs report in a while,” said Ian Shepherdson of Pantheon Macroeconomics, pointing to the disconnect between job gains and rising unemployment reported by the Labor Department.

Some analysts said widespread job gains in May, as hospitals, restaurants, bars and construction companies added workers, were a sign the Fed will have to raise interest rates further.

The Labor Department also said employers added more jobs in April, more than expected.

Others said the report included signs that should convince the bank to wait, pointing to a moderation in wage gains. At 3.7%, the unemployment rate was also the highest in seven months.

BBC