U.S. job growth accelerated again in May, defying expectations for a slowdown, even as the unemployment rate rose to the highest level in more than two years.
Employers added 272,000 jobs in May, the Labor Department said in its monthly payroll report released Friday, easily topping the 185,000 gain forecast by LSEG economists. But the unemployment rate unexpectedly inched higher to 4% against expectations that it would hold steady at 3.9%.
It marked the highest level for the jobless rate since January 2022.
Wage growth also remained strong last month, with average hourly earnings — a key measure of inflation — rising 0.4%, more than expected. On an annual basis, wages increased 4.1% in May.
Markets have been closely watching the report for evidence the labor market is finally softening after months of solid job gains as Fed policymakers weigh when to start cutting interest rates. Although inflation has fallen notably from its peak, progress has cooled sharply since the summer.
Officials have signaled they are in no rush to cut, and that incoming economic data will guide their decision.
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Health care continued to lead the way in job creation, onboarding 68,000 new workers in May. Other sectors showing notable growth included the government (43,000), leisure and hospitality (42,000), and professional, scientific and technical services (32,000).
The report also showed modest revisions to job gains earlier this year. Gains for March were revised down by a total of 5,000 jobs to 310,000, the government said, while April’s gain also came in slightly lower at 165,000 jobs.
This is a developing story. Please check back for updates.
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