US job growth beats expectations

The jobless rate held steady at 3.6% in the US, with the jobs report also showing solid wage gains last month, painting a picture of an economy continuing to expand

The jobless rate held steady at 3.6% in the US, with the jobs report also showing solid wage gains last month, painting a picture of an economy continuing to expand

U.S. employment rose more than expected in May, while the unemployment rate held steady at 3.6%, signs of a tight labor market that could keep the Federal Reserve’s foot on the line. brake pedal to cool demand.

Nonfarm payrolls increased by 3.90,000 jobs last month, the Labor Department said Friday in its closely watched jobs report. April data has been revised upwards to show payrolls increased by 4,36,000 jobs instead of 4,28,000 as previously estimated.

Economists polled by Reuters had forecast a payroll increase of 325,000 jobs last month. Estimates ranged from 2,50,000 additional jobs to 4,77,000.

The report also showed strong wage gains last month, painting a picture of an economy that continues to grow, albeit at a moderate pace. The Fed is trying to curb the demand for labor to control inflation, without pushing the unemployment rate too high. The US central bank’s hawkish monetary stance and accompanying tightening of financial conditions have left investors fearing a recession next year.

Economists are divided on whether the moderation in the pace of job growth is due to cooling labor demand or labor shortages. They urge investors to focus on the unemployment rate and wage growth to gauge the tightness of the job market. There were 11.4 million job openings at the end of April, with almost two positions for every unemployed person.

The US central bank has raised its key rate by 75 basis points since March. It is expected to raise the policy rate by half a percentage point at each of its next meetings this month and in July. Fed Vice Chair Lael Brainard said on Thursday she saw little reason to pause in September.

Although cries of a recession are growing louder, most economists believe the economic expansion will continue into next year. They acknowledged that high inflation was eroding consumer purchasing power and business investment, but argued that the fundamentals of the economy were strong and any downturn was likely to be moderate.

The outlook for the economy has also been clouded by a weakening global environment, in part due to Russia’s war on Ukraine and China’s zero COVID policy.

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