Employment growth has been higher than expected by economists. An average of 195,000 new jobs was expected. This fact could have consequences for interest rates in the United States. The situation on the labor market plays an important role in the interest rate policy of the Federal Reserve.
The US central bank has been raising interest rates for some time to combat high inflation, but these interest rate hikes are creating headwinds for the economy. However, strong job growth indicates that a major economic downturn is not yet underway.
Unemployment has increased
Unemployment has increased slightly. In May, 3.7% of the labor force was unemployed, up from 3.4% the previous month. Unemployment can also rise if more jobs are created. This is because more people have recently indicated that they are looking for work, but do not yet have a paid job.
Government data also showed wages rose less on average in May than the previous month. These figures are also important for central bankers, because they say something about wage costs for employers and the tightness of the labor market.
Interest decision
Fed policy makers will meet again on June 13 and 14 to discuss interest rates. Ahead of the interest rate decision, US inflation will be released for May. Financial markets are hopeful that the central bank will soon stop raising interest rates.