Employers added 172,000 jobs in May, surging past expectations as labor market remains resilient
Employers added 172,000 jobs in May, blowing past analyst forecasts, as the labor market continued to show strength despite rising inflation and concerns about slowing economic growth.
By the numbers
Economists polled by FactSet predicted that the economy would gain 105,000 jobs in May.
The latest employment data follows two months of strong payroll gains. The Labor Department on Friday also revised payroll gains up for both March and April, bringing the totals up to 214,000 and 179,000, respectively.
The unemployment rate in May was 4.3%, unchanged from April.
Leisure and hospitality drove the bulk of the job growth, with the sector adding 70,000 jobs, higher than the average monthly gain of 14,000 over the last year. Local government also saw solid gains, with employment rising by 55,000. Health care, which has been the leading sector for employment growth in past reports, added 35,000 jobs in May.
The job market continued to expand in May despite rising price pressures from the Iran war. Inflation is now at the highest level in almost three years as the conflict in the Middle East squeezes global energy supplies.
What experts are saying
May's employment numbers mark the third month of strong hiring. From March through May, employers added an average of nearly 190,000 jobs per month, compared with an average gain of roughly 63,000 over the same period last year.
With the job market showing signs of stabilization, economists say the Federal Reserve is likely to hold off on lowering interest rates as it tries to subdue rising inflation.
"This is a blowout jobs report," said Olu Sonola, head of U.S. economics at Fitch Ratings, in an email. "Hiring remains narrow, but the headline strength is enough to keep the Fed focused on inflation. With inflation already accelerating, the bigger risk is rising price pressure — not a sustained weakening in labor demand."
Sonola added, "That makes it much harder to argue for lower interest rates anytime soon."
Still, the latest payroll figures may overstate the strength of the labor market, said Laura Ullrich, director of economic research at job search firm Indeed.
"This is still a low-hire, low-fire market, and the calm on the surface reflects stillness underneath, rather than genuine momentum," she said in an email.
Although wage growth is healthy, rising in May at an annual rate of 3.4%, inflation the previous month rose at an annualized 3.8%, eroding people's purchasing power. Three-quarters of Americans said their wages aren't keeping up with inflation in a recent CBS News poll.
"It's getting easier to find a job, but not a job that will offer raises above inflation," Heather Long, chief economist at Navy Federal Credit Union, said in an email.
