Unexpectedly high hiring in the US last month continued to defy recession forecasts and raise new concerns about the timing of interest rate declines.
According to the US Labor Department, employers added 272,000 jobs in May, which was higher than the projected 185,000 new positions.
The US central bank is keeping a careful eye on the labor market in the US to see how it is enduring the weight of borrowing costs, which are at an all-time high.
In an effort to combat inflation—a measure of the rate at which prices are rising—the Federal Reserve has dramatically boosted interest rates. The Fed has cited the strong job market as proof that the economy can endure the current interest rate levels.
According to economists, the most recent job data will support the argument that discussing lowering borrowing prices is premature.
“The data of today indicates that the Fed will need to remain patient and wait for a longer period of time before making that initial cut,” stated Richard Carter, who oversees fixed interest research at Quilter Cheviot, an investment management company.
The numbers may potentially take any move this year “off the table,” he continued.
The US Labor Department’s data also revealed that during the previous 12 months, average hourly earnings increased by 4.1%, more than anticipated. Analysts had anticipated a 3.9% rise.
