Financial News: U.S. Job Growth Far Exceeds Estimates In May

U.S. Job Growth Far Exceeds Estimates In May But Unemployment Rate Ticks Higher

06/07/2024 - 09:23:00 (RTTNews)

(RTTNews) - Employment in the U.S. shot up by far more than economists had been expecting in the month of May, according to a closely watched report released by the Labor Department on Friday.

The Labor Department said non-farm payroll employment surged by 272,000 jobs in May after climbing by a downwardly revised 165,000 jobs in April.

Economists had expected employment to increase by about 185,000 jobs compared to the addition of 175,000 jobs originally reported for the previous month.

The much stronger than expected job growth partly reflected another notable increase in employment in the health care and social assistance sector.

The report also showed significantly faster job growth in the government and leisure and hospitality sectors following modest increases in the previous month.

Meanwhile, the Labor Department said the unemployment rate crept up to 4.0 percent in May from 3.9 percent in April. The unemployment rate was expected to remain unchanged.

With the unexpected increase, the unemployment rate reached its highest level since hitting a matching rate in January 2022.

The uptick by the unemployment rate came as the household survey measure of employment tumbled by 408,000 persons, while the size of the labor force shrank by 250,000 persons.

The report also said average hourly employee earnings climbed $0.14 or 0.4 percent to $34.91, with the annual rate of growth accelerating to 4.1 percent in May from 4.0 percent in April.

"Although this report is not uniformly strong, on net, it is showing a job market that is still quite tight, which likely means that the Federal Reserve will continue to hold at its current level of rates, as inflation is unlikely to drop back to target given this pace of wage growth," said Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni.

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