In May, the US economy showed signs of resilience by adding more jobs than expected. Despite previous indications of a slowdown, the labor market added 272,000 nonfarm payroll jobs, exceeding the 185,000 additions forecasted by economists. However, the unemployment rate rose slightly to 4% from 3.9% in April.
Despite this increase in unemployment rate, May’s job additions were significantly higher than the 165,000 jobs added in April. Additionally, wages also increased in May. On a yearly basis, wages rose by 4.1%, reversing a downward trend seen in the previous month. On a monthly basis, wages increased by 0.4%, which is higher compared to the 0.2% increase seen in the previous month. This positive job and wage growth comes as the stock market has reached record highs and investor confidence is increasing that the Federal Reserve may cut interest rates in September.
Recent data shows that job openings fell in April to their lowest level since February 2021 but returned to pre-pandemic levels of 1.2 with respect to unemployed people ratio as per Job Openings and Labor Turnover Survey (JOLTS). This suggests that labor market is resilient and normalizing to pre-pandemic levels. Overall, the latest report on job additions, wages and market confidence indicates a strong and growing US economy despite potential concerns about potential rate cuts by Federal Reserve
