According to the US Department of Labor, 339,000 new jobs were added last month in the world’s largest economy. In April there were still a revised 294,000.
Job growth was higher than economists had expected. An average of 195,000 new jobs had been expected. This fact may have consequences for interest rates in the US. The situation on the labor market plays an important role in the interest rate policy of the Federal Reserve.
The US central bank has been raising interest rates for some time to combat high inflation, but those interest rate hikes are creating headwinds for the economy. However, strong job growth indicates that a strong economic downturn is not yet underway.
Unemployment increased
Unemployment did increase slightly. In May, 3.7 percent of the labor force was unemployed, compared to 3.4 percent in the previous month. Unemployment may also increase if more jobs are created. This is because more people have recently indicated that they are looking for work, but do not yet have a paid job.
Government figures also showed that wages rose less on average in May than in the previous month. These figures are also important for central bankers, because they say something about wage costs for employers and tightness on the labor market.
Interest decision
Fed policymakers will meet again on June 13 and 14 to discuss interest rates. Before the interest rate decision, the US inflation figure for May will be released. The financial markets are hoping that the central bank will soon stop raising interest rates.
