The U.S. economy added 272,000 jobs in May and the unemployment rate rose slightly to 4 percent, according to new Labor Department data released Friday.
The May jobs report was much better than economists' expectations, who forecast a gain of 185,000 jobs and no movement from April's unemployment rate of 3.9 percent.
However, the slight increase in unemployment puts an end to the longest streak of unemployment below 4 percent since the 1960s.
The May jobs report comes as the Federal Reserve prepares to vote on interest rates next week. The central bank has kept interest rates at a range of 5.25 to 5.5 percent since July 2023, and there is little hope that it will start cutting rates this month.
The Fed has raised interest rates to their current 20-year high in an effort to curb inflation that has been at a 40-year high. After peaking at 9.1 percent in June 2022, inflation declined significantly and fell to 3.4 percent in April.
However, as inflation remains stubbornly above target, the central bank has repeatedly kept interest rates steady.
“After a lower-than-expected jobs report in April, the labor market rebounded, demonstrating its continued strength,” Joe Gaffoglio, president of Mutual of America Capital Management, said in a statement.
“Given this continued growth, we do not expect the Federal Reserve to cut rates anytime soon, especially as inflation remains stubbornly above the Fed's 2% target level,” Gaffoglio added.
Traders currently expect the Fed's first interest rate to appear in September, according to CME's FedWatch tool.
President Biden touted Friday's strong jobs numbers — and the 15.6 million jobs added since he took office — while pledging to continue efforts to bring down prices.
“The great American comeback continues, but we still need to make more progress,” the president said in a statement, adding, “I will continue to fight to lower costs for families like the ones I grew up with in Scranton.” '
With interest rates remaining high and Americans continuing to reel from the lingering effects of inflation, Biden is struggling to change American opinion on the economy ahead of November's rematch against former President Trump.
A recent ABC News/Ipsos poll found that more Americans trust Trump on the economy and inflation than Biden.
While 46 percent said they trust the former president on the economy, only 32 percent said the same of the sitting president. On inflation, 44 percent said they trust Trump, compared to the 30 percent who trusted Biden.
This could spell trouble for Biden, who is trailing Trump by just 0.8 percent, according to The Hill-Decision Desk polling average at headquarters.
Updated at 9:54 a.m. EDT.
