Data from the Bureau of Labor Statistics released Friday showed the labor market added 272,000 nonfarm jobs in May, far more than the 185,000 economists had expected.
Meanwhile, the unemployment rate rose to 4% from 3.9% the previous month. Job additions in May were significantly higher than the 165,000 jobs added in April.
At the same time, wages, considered an important metric for inflationary pressures, rose 4.1% year-on-year, reversing a downward trend from the previous month. On a monthly basis, wages rose 0.4%, up from a 0.2% increase the previous month.
The report came as the stock market hit an all-time high amid slower-than-expected economic data, which boosted investor confidence that the Federal Reserve could cut interest rates in September. Entering Friday's data, markets pegged expectations at a 67% probability that the Fed will cut rates in September, up from the roughly 50% probability seen a week ago, according to CME's FedWatch Tool.
Other data out this week reflected a still resilient labor market showing signs of normalization to pre-pandemic levels. The latest Job Openings and Job Loss Survey (JOLTS), released on Tuesday, showed job openings fell in April to the lowest level since February 2021.
Significantly, the ratio between the number of job openings and the unemployed returned to 1.2 in May, which is in line with pre-pandemic levels.
