May jobs report beats expectations with 390K jobs added to the economy. FOX Business’ Edward Lawrence with more.
Better-than-expected job growth in May likely solidified the likelihood of the Federal Reserve lifting interest rates by a half-percentage point at its meeting in two weeks and again in July as it races to fight inflation.
Employers added 390,000 jobs in May, the Labor Department said in its monthly payroll report released a few days ago, easily beating the 328,000 jobs forecast by Refinitiv economists. The unemployment rate, meanwhile, held steady at 3.6%, the lowest level since February 2020.
HOW THE FEDERAL RESERVE MISSED THE MARK ON SURGING INFLATION
While Fed officials appeared largely united in their support for a 50-basis point hike this month and next, the report indicates the labor market remains healthy in the face of growing headwinds from roaring inflation, rising interest rates, supply chain constraints and a worker shortage — giving central bank policymakers a green light to tighten monetary policy as needed.
"This does not look like a labor market about to tip into recession," said Daniel Zhao, senior economist at jobs review website Glassdoor. "Job gains were healthier than expected and the labor force participation rate ticked up. Despite concerns about a slowdown and even a recession, the labor market’s fundamentals look healthy."
The central bank is aiming to raise rates beyond a neutral level, meaning it no longer provides any stimulus to the economy. That point could be reached in November or December, Fed Chairman Jerome Powell said last month during an interview with the Wall Street Journal. Last week's report will likely keep the Fed on track with that ambitious plan.