FILE PHOTO: A sign for a job fair is displayed on Fifth Avenue after the release of employment figures in Manhattan, New York City, US, September 3, 2021. Photo by REUTERS/Andrew Kelly
WASHINGTON (AP) — U.S. employers added 272,000 jobs in May, accelerating from April and signaling that companies are confident enough about the economy to continue hiring despite persistently high interest rates.
Last month’s strong job gains reflect the durability of America’s consumer-driven economy, as households across the country continue to spend steadily, forcing many employers to keep hiring to meet customer demand.
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The Labor Department said Friday that the unemployment rate rose slightly to 4% from 3.9%, remaining low and ending a 27-month streak of unemployment below 4%, matching the longest streak since the late 1960s.
President Joe Biden is likely to point to Friday’s jobs report as a sign of the economy’s strength under his administration. Presumptive Republican presidential nominee Donald Trump has criticized Biden’s economic policies by focusing on soaring inflation, which polls show still figures heavily in voters’ assessments of the economy.
Last month’s strong job gains suggest the economy will continue to expand at a steady pace. A healthy job market typically drives consumer spending, the economy’s main driver. Recent signs of economic weakness have raised concerns that growth may be stalling. The May jobs report could help ease those concerns.
Still, Federal Reserve inflation experts want the economy to calm down a bit before considering when to start cutting interest rates.The Fed has raised interest rates sharply in 2022 and 2023 after a strong recovery from the pandemic recession sparked the worst inflation in four decades.
Annual inflation, the Fed’s preferred measure, has fallen to 2.7%, but remains above the Fed’s 2% target. A longer-term stabilized employment could slow wage growth and help tame inflation altogether. Chairman Jerome Powell has said the Fed needs more confidence that inflation will return to its target sustainably before it cuts borrowing costs.
When the Fed began raising interest rates aggressively, most economists predicted the resulting surge in borrowing costs would spark a recession and send unemployment rates painfully high. But the job market has proven more durable than most expected. Still, Americans remain unhappy with high prices, a source of discontent that could jeopardize Biden’s reelection.
A key reason the economy is still producing strong net job gains is that layoffs remain at historic lows. Just 1.5 million people lost their jobs in April, the lowest monthly figure on record in the past 24 years of data, excluding the peak of the pandemic. After years of struggling to fill positions, most employers are reluctant to lay off employees.
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FILE PHOTO: A sign for a job fair is displayed on Fifth Avenue after the release of employment figures in Manhattan, New York City, US, September 3, 2021. Photo by REUTERS/Andrew Kelly
