US job growth remains strong despite economic clouds

Job growth boomed in May, reaffirming the vitality of the labor market despite a whirlwind of economic headwinds.

US employers added 339,000 jobs on a seasonally adjusted basis the employment agency said on Friday, up from a revised total of 294,000 in April.

The strong numbers emerged from a survey of employers. A separate section of the report, based on a household survey, produced a somewhat dissonant picture.

That data showed an increase in the unemployment rate from 3.4 percent to 3.7 percent and a decrease of 310,000 in the number of people employed as participation in the labor force changed little.

In a sign that the pressure to entice workers with wage increases is easing, wage growth slowed slightly in May, with median hourly wages rising 0.3 percent from April and 4.3 percent over the year.

“We’re still seeing a job market that is gradually cooling, but it’s on an ice age,” said Sarah House, an economist at Wells Fargo.

Still, hiring numbers suggest that employers across the spectrum remain enthusiastic about workers, even in the face of high interest rates and economic uncertainty. Many still hire workers to meet constant consumer demand, especially for services.

Instead of laying off employees – which would indicate deeper cracks in the labor market – a large proportion of companies have also settled for limiting their workforce through turnover.

An open question is whether employers can continue to reject economic challenges – and for how long.

“While overall job market performance has been surprisingly strong, I don’t think the job market can last forever with the severity of the Fed’s rate hikes,” said Ms. House.

The report complicates the picture for the Federal Reserve, which has been raising interest rates for more than a year to dampen the labor market and contain price increases. Fed officials have indicated that the jobs report will be an important factor in deciding whether to raise rates again. The next meeting is on June 13 and 14.

Looming above the report is the debt ceiling deal, which the Senate passed Thursday, though economists largely expect spending caps and cuts to have only a marginal impact on the labor market going forward.