Employers Surpass Expectations by Adding Abundant Jobs in May

In May, the labor market showed surprising strength as employers added 272,000 jobs, surpassing the 165,000 jobs added in April, according to a report from the Bureau of Labor Statistics. Economists had predicted only 190,000 jobs would be added, making the actual numbers far surpass expectations.

The unemployment rate also exceeded economists’ predictions, sitting at 4.0% compared to April’s 3.9%. This put an end to a 27-month streak of the unemployment rate remaining below 4.0%. Despite signs of a potential slowdown in the labor market earlier in the week, the data showed that layoffs were still rare, while employees were less likely to quit and job availability was decreasing.

The news of the strong labor market caused Treasury yields to rise, with the 10-year yield increasing by 11 basis points. Market futures for Dow and Nasdaq were down 0.3% in premarket trading, while S&P futures were down 0.4%. This reaction suggests that investors had not anticipated the positive job growth reported.

The Federal Reserve may now have more flexibility in maintaining interest rates as it continues its fight against inflation. A strong job market could help the Fed find the right balance in meeting its dual mandate. This update to the blog post includes the market reaction to the employment data.