U.S. Economy Adds More Non-Farm Jobs Than Expected Despite Headwinds in May

The U.S. Department of Labor reported on Friday (2nd) that the U.S. economy continued to create jobs in May, with non-farm payrolls rising more than expected despite multiple headwinds.

The report showed that the number of non-agricultural employment in the United States increased by 339,000 in May, compared with expectations for an increase of 195,000. The number of new non-farm jobs in March was revised up from 165,000 to 217,000; the number of new jobs in April was revised up from 253,000 to 254,000. After the revision, the total number of new jobs added in March and April was 93,000 higher than before the revision.

The unemployment rate in May was 3.7%, higher than the previous value of 3.4% and the expected 3.5%, a new high since October 2022, but actually still close to the lowest level since 1969.

Average hourly wages rose 4.3 percent year-on-year in the month, slightly below expectations for a 4.4 percent increase in hourly wages. The monthly increase was 0.3%, roughly in line with expectations, and the previous value was 0.5%.

U.S. stocks initially reacted little to the report,Dow Jones IndexFutures rose about 200 points. The 2-year U.S. bond yield rose by 8 basis points, implying that the market has increased expectations for the Fed to raise interest rates.

Employment growth was led by professional and business services, which created 64,000 new jobs during the month. The government helped add 56,000 jobs, while health care contributed 52,000.

Other notable growers include leisure and hospitality (48,000), construction (25,000), and transportation and warehousing (24,000).

Recent data suggests that consumers continue to spend even as they tap into savings and increasingly use credit cards to pay for purchases.

Since March 2022, the Federal Reserve has raised its benchmark interest rate 10 times to fight inflation that has not yet disappeared. In recent days, some policymakers have signaled a willingness to pause a streak of rate hikes in June as they look to understand the impact of policy tightening on the economy.