Job growth in May was surprisingly strong, putting to rest lingering fears of a broader economic slowdown and potentially slowing the Fed's interest rate cut schedule.
The US economy added 272,000 jobs for the month, well above the Dow Jones estimate of 190,000 jobs. That's also higher than the average monthly gain of 232,000 over the past 12 months, according to the U.S. Bureau of Labor Statistics.
In May, employment rates rose in many industries, with health care leading the way again this month, followed by government and hospitality. The three sectors added, respectively, 68,000, 43,000, and 42,000 jobs, similar to trends seen over the past year. These sectors also accounted for more than half of the month's total gains. The combined field of health care and social assistance generated more than 83,000 jobs in May.
The professional, scientific and technical services sector was also a bright spot in May, adding 32,000 jobs during the month, well above the average monthly gain of 19,000 jobs over the past 12 months.
On the other hand, social assistance employment trended higher, adding 15,000 jobs last month, below the sector average of 22,000 jobs per month over the past year. At the same time, there were job losses at department stores and furniture and home furnishings retailers.
Other major industries — including oil and gas extraction, construction, manufacturing, information and financial activities — saw little or no change during the month in employment, according to the report.
Investors walked away from the report frustrated with the Federal Reserve's interest rate cut in June, noting that the increase in job growth and above-average wage growth paints a picture of a fairly robust consumer.
“As has been the case recently, job growth has been driven by non-cyclical areas like health care and government, but cyclical areas like leisure and hospitality have been strong… a cut is likely,” Sonu Varghese, global macro strategist at Carson Group, said on Friday. “Only in September, assuming we continue to see lower inflation.”
