Key facts
- US economy added 172,000 jobs in May.
- Unemployment rate remained steady at 4.3% in May.
The US economy added 172,000 jobs in May, exceeding expectations. The unemployment rate held steady at 4.3%, while annual wage growth slowed to 3.4%. Markets increased the chance of a Federal Reserve rate hike in December.
The U.S. economy added 172,000 jobs in May, exceeding economists' expectations and marking a third consecutive month of strong job gains. The unemployment rate held steady at 4.3% for the third month. Annual wage growth slowed to 3.4% from 3.6% in April. The labor market is showing resilience despite factors like reduced labor force growth due to immigration policies and business caution influenced by past tariffs and the ongoing U.S.-Israeli war with Iran. Fiscal stimulus, such as tax and tariff refunds, has supported corporate profits, preventing large-scale layoffs. The leisure and hospitality sector led job growth with 70,000 jobs added, while government payrolls increased by 52,000. Financial markets now anticipate a higher probability of a Federal Reserve rate hike in December, with the Fed's benchmark rate currently between 3.50% and 3.75%. The dollar strengthened against a basket of currencies, and U.S. Treasury yields rose.
This resilient jobs report suggests continued economic strength, potentially influencing the Federal Reserve's decisions on interest rates and impacting market expectations for future monetary policy.