The US economy unexpectedly added 339,000 jobs in May 2023, far above market forecasts of 190,000 and after an upward revision from 294,000 in April, according to the Labor Department in its monthly payroll report released on Friday.
US job growth unexpectedly picked up in May as the job market remained surprisingly resilient despite rising interest rates, declining economic growth and banking turmoil.
Job gains occurred in professional and commercial services, government, health care, construction, transportation and storage, and social work.
After the disclosures, the 25 basis point bullish assumptions on Fed Funds rose to 34.4%, according to derivatives traded on the Chicago Mercantile Exchange (CME). Yesterday, the bets pointed to a 20.4% probability.
The unemployment rate, meanwhile, jumped to 3.7% – far above the 3.5% estimate.
April data was revised to show 294,000 jobs created, rather than 253,000 as previously reported.
Wage pressures are also easing, which should offer some comfort to Fed officials struggling to bring inflation back to the US central bank’s 2% target.
Average hourly wages rose 0.3% after rising 0.4% in April. That reduced the annual wage increase to 4.3% from 4.4% in April. Annual wage growth averaged about 2.8% before the pandemic.
The Economically Active Population (EAP) was estimated at 166.818 million people, an increase of 130 thousand on a monthly basis. The labor force participation rate, that is, the proportion of the EAP in relation to the total civilian population, stood at 62.6% in May, stable in relation to April.
The US private sector opened 283,000 jobs in May. Of this total, the service sector was responsible for generating 257,000 jobs, while the industrial sector – which includes manufacturing, mining and construction – created 26,000 jobs. In April, the industrial sector had opened 28,000 jobs and the service sector had created 225,000.
Within industry, manufactures closed 2,000 jobs, civil construction created 25,000 jobs and mining opened 3,000 jobs. In services, the highlight was the area of education and health services, which created 97,000 jobs. The public sector opened 56,000 jobs in May, after opening 41,000 jobs in April.