According to new data, US employers added more new jobs in May than expected, with payrolls increasing by 390,000.
Figures from the US Labor Department beat economists’ forecasts for an increase of 325,000 in new roles, although May’s growth was the slowest.
The unemployment rate stood at 3.6% for the third straight month.
The health of the labour market in the world’s largest economy is being closely watched as rapidly rising prices raise fears of a future recession. Some companies have recently shared plans to slow or freeze hiring.
Retail giants including Walmart and Amazon have said they hired too aggressively at the start of the year and have seen their profits hit as rising prices have proved difficult to pass on to customers.
Analysts said the job growth in May remained solid, if slower, than last year.
“Part of the slowing in payrolls in recent months likely is a knee-jerk reaction to higher costs due to the surge in energy prices triggered by the war in Ukraine,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics.
But we also wonder if employers have cut back hiring in anticipation of consumers’ reining-in their spending?”
Though he said: “So far, that hasn’t happened.”
Friday, US President Joe Biden said that the economy was moving to a “new period of stable, steady growth” after surging forward last year, and Americans should “expect to see more moderation”.
“We aren’t likely to see the kind of blockbuster job reports month after month as we’ve had over this past year, but that’s a good thing,” he said. “That stability puts us in a strong position to tackle what is a problem – inflation.”
Like other central banks around the world, the US Federal Reserve is raising interest rates to try to curb inflation.
Such moves typically slow economic growth by making borrowing more expensive and reducing demand.
Sophia Koropeckyj, managing director at Moody’s Analytics, said: “Today’s report will keep the Fed on track in its tightening program to steer the economy toward a soft landing (slowing the economy) without tipping it over the edge toward recession and to help prevent a wage-price spiral from forming.
“The probability of recession is inching higher, but we still expect better than even odds of avoiding a downturn.”