The U.S. economy added 272,000 jobs in May, a surprisingly strong gain that suggests underlying economic momentum despite higher interest rates. The unemployment rate ticked up to 4.0% from 3.9% in April, according to data released on Friday by the Bureau of Labor Statistics.
Economists surveyed by Reuters had forecast 185,000 job gains. The May figures were boosted by strong hiring in healthcare, government, and leisure and hospitality.
Wage growth also accelerated, with average hourly earnings rising 0.4% in May and 4.1% from a year earlier. This could complicate the Federal Reserve’s efforts to bring inflation back to its 2% target.
The strong jobs report is likely to keep the Federal Reserve on hold with interest rates at its upcoming meeting. The central bank has been raising rates to cool demand and curb inflation.
The data comes as the Fed is trying to engineer a “soft landing” for the economy, where inflation is brought under control without triggering a recession. The robust job growth suggests that the economy may be able to withstand higher borrowing costs for longer than previously anticipated.