Broad-based and stronger-than-expected hiring by employers in May should put to rest any concern about sluggish U.S. economic growth and the potential for a slide into recession.
The U.S. economy added 280,000 jobs last month, the Labor Department reported Friday, soaring past the 225,000 projected by mainstream economic forecasters.
Hiring was positive across all major sectors of the economy. The unemployment rate ticked up to 5.5 percent as more people returned to the labor market in search of work.
The strong hiring followed last month’s revision of first-quarter growth numbers, which showed the economy shrank at annual rate of 0.7 percent from January through March. The weak read of gross domestic product, the sum of U.S. goods and services, prompted concerns about a possible recession.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
“Any worries about the economy’s strength given the decline in GDP in the first quarter should be allayed with today’s strong job numbers,” said Mark Zandi, chief economist for forecaster Moody’s Analytics.
The White House cheered the strongest jobs report of 2015.
“I feel good about these numbers,” Jason Furman, head of the White House Council of Economic Advisers, said on CNBC shortly after the jobs report came out.
In his White House blog, Furman noted that the economy has added 3 million jobs over the past 12 months, “nearly the fastest pace in more than a decade.”
A solid half-year of hiring and building wage pressures increase the likelihood that the Federal Reserve will raise interest rates this year, perhaps in September. The Fed’s benchmark interest rate influences borrowing costs across the economy. It has been anchored at near zero since December 2008.
Friday’s report also confirmed that measures of underemployment in the economy are slowly improving. The number of discouraged workers is down over the past year, as is the number of people ending temporary employment.
The so-called unofficial unemployment rate, an alternative measure that includes people hovering just outside the labor force and part-time workers who want full-time work, is now at 10.8 percent. In May 2014 it was 11.7 percent.
“The only blemish in the job market is the loss of energy-related jobs resulting from the collapse in oil prices. The good news is that these job losses should wind down by the fall,” said Zandi, adding that the “U.S. job juggernaut is back into high gear. It would take a lot to derail it.”
Companies involved in oil and natural gas extraction shed 17,200 jobs in May. The better-paying professional and business services sector led the pack with 63,000 new jobs, closely followed by the leisure and hospitality sector at 57,000.