The American economy added 245,000 jobs in May, the Bureau of Labor Statistics reported on Friday, beating economists' expectations of 185,000 and demonstrating continued resilience in the labor market despite higher interest rates. The unemployment rate held steady at 3.9 percent, near historically low levels.
Healthcare led all sectors with 65,000 new jobs, reflecting continued demand for medical services as the population ages. Construction added 32,000 positions as residential building activity remained elevated despite higher mortgage rates. Professional and business services contributed 42,000 jobs.
"The labor market continues to confound skeptics who predicted that higher interest rates would cause a sharp slowdown," said Secretary of Labor Marty Walsh. "American workers are experiencing unprecedented job security, and wage growth is outpacing inflation for the first time in years."
Average hourly earnings grew 0.4 percent for the month, bringing the year-over-year increase to 4.0 percent. The wage growth, while still above the Fed's comfort level, has moderated from peaks above 5 percent seen in 2022.
Economists at Bank of America revised their recession probability forecast downward following the report. "The employment picture remains remarkably robust," said Bank of America Senior Economist Michael Gapen. "We are increasingly confident that a soft landing is achievable."