Unexpectedly strong job growth in May dispelled lingering concerns about a broader economic slowdown and could slow the Federal Reserve’s schedule for rate cuts.
The U.S. economy added 272,000 jobs this month, significantly higher than the Dow Jones consensus estimate of 190,000 jobs. That’s also higher than the average monthly growth rate of 232,000 over the past 12 months, according to the Bureau of Labor Statistics.
Employment rose across several industries in May, with health care leading the way again this month, followed by government and hospitality. The three industries added 68,000, 43,000 and 42,000 jobs respectively, similar to last year’s trends. These sectors also accounted for more than half of the month’s total gains. In May, the health care and social assistance sectors combined created more than 83,000 jobs.
Professional, scientific and technical services were also a highlight in May, with 32,000 new jobs added in the month, well above the 19,000 average monthly increase over the past 12 months.
Social assistance employment, on the other hand, is trending upward, adding 15,000 jobs last month, below last year’s industry average of 22,000 monthly jobs. Meanwhile, department stores and furniture and home furnishings retailers also saw job losses.
Employment in other major industries – including oil and gas extraction, construction, manufacturing, information and financial activities – showed little or no change this month, the report said.
Investors were dismayed by reports of a rate cut by the Federal Reserve in June, noting that rising job growth and above-average wage growth painted a rather strong picture for consumers.
“As has been the case recently, job growth was driven by non-cyclical sectors such as health care and government, but cyclical sectors such as leisure and hotels were strong… which may keep the Fed in hold-down mode, starting with Carson Group Sonu Varghese, global macro strategist at Carson Group, said on Friday that a rate cut would likely come only in September, assuming inflation remains weak.
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