May job growth held strong

The Labor Department reported 172,000 new jobs last month, more than double economists’ expectations of roughly 80,000.

The labor market continues to show resilience despite concerns about inflation, AI-related job displacement, and oil price pressures stemming from the conflict with Iran.

The BLS also revised March jobs up by 29,000 to 214,000 and April up by 64,000 to 179,000.

While job growth was broad, hospitality and leisure led with 70,000 openings. The upcoming FIFA World Cup matches in America and the start of summer vacations could also have added to the numbers.

Other sectors contributing to job growth included local government (55,000), health care (35,000), and social assistance (12,000).

However, unemployment held steady at 4.3%, and 27.5% of the people were without jobs for 27 weeks or longer—the highest rate since December 2021.

Additionally, wages rose 3.4% year over year in May, but the inflation rate is 3.8%, which would likely affect low-income US households.

Markets are increasingly pricing in a quarter-point Fed rate increase by year-end as inflation remains elevated and labor market data continues to surprise to the upside.

Following the May jobs report, stock market futures slipped while Treasury yields rose.