**May Jobs Report Tops Expectations, Reinforces Fed Caution on Rate Cuts**
The U.S. labor market showed continued resilience in May, with nonfarm payrolls increasing by 139,000—surpassing the 125,000 jobs projected by economists, according to the Bureau of Labor Statistics. The unemployment rate held steady at 4.2%.
However, previous job gains in March and April were revised downward by a total of 95,000 positions. Additionally, the labor force participation rate dipped slightly to 62.4% in May, down from 62.6% in April, signaling a modest retreat in workforce engagement.
Wage growth accelerated in May, with average hourly earnings rising by 0.4%—double the pace of April’s 0.2% gain and above the expected 0.3%. On a year-over-year basis, wages climbed 3.9%, surpassing expectations of 3.7% and matching the upwardly revised figure from the previous month.
The report comes after earlier signs of a cooling labor market, including initial jobless claims reaching their highest level since October and private-sector data revealing the slowest hiring pace in over two years. Despite these indicators, May’s numbers suggest that job creation remains robust.
The data underlines the Federal Reserve’s cautious stance on potential interest rate adjustments. With inflation risks still a concern and persistent uncertainty over trade policies, Fed officials are expected to maintain a patient approach. The latest employment report strengthens the likelihood that the Fed will leave interest rates unchanged at its upcoming meeting later this month.
