Blunting worries about the American economy’s momentum after a stretch of lackluster growth, the government reported on Friday that employers added a hefty 280,000 jobs in May, well above the average monthly totals logged over the last year.
The official unemployment rate ticked up slightly to 5.5 percent from 5.4 percent, as more Americans dived back into the labor pool and started actively looking for work. Higher hourly wages, which rose 0.3 percent last month, may have helped lure back some sidelined workers while providing those already on the job with some long-awaited gains.
The return of stronger job growth is also likely to strengthen the resolve of Federal Reserve officials who are hoping to start raising interest rates from their near-zero level later this year.
“This is a confirmation that the economy is performing well and the first quarter was an aberration,” said Carl Tannenbaum, chief economist at Northern Trust.
He added that he was encouraged by the growth in wages, which have now risen 2.3 percent over last year. “It’s good for workers and also a sign that capacity in the labor market is being utilized more fully.”
So May's numbers, including an upward revision in March to back over 110K, really makes it possible we could see an interest rate hike this year. If these numbers keep up, unemployment will be under 5% by the end of the year. Some 63 straight months of job growth, along with 3 million new jobs in 12 months. We need growth like that for the rest of this year and next and if we get it, we're going to be in much better shape.