US employers added more new jobs than expected in May with payrolls rising by 390,000, according to new data.
The figure from the
US Labor Department beat economists' forecasts for a 325,0000 rise in new roles
though May's increase was the slowest for a year.
The unemployment rate
held at 3.6% for the third month in a row.
The health of the
labour market in the world's largest economy is being closely watched as
fast-rising prices raise fears of future downturn.
In recent weeks, some
companies have shared plans to slow or freeze hiring.
Retail giants
including Walmart and Amazon have said they hired too aggressively earlier in
the year and have seen their profits hit as rising prices proved more difficult
to pass onto customers.
Meanwhile, electric
carmaker Tesla is reportedly calling a halt to hiring and has warned that 10%
of its salaried workforce may need to be cut. In an email to staff, seen by the
news wire Reuters, Tesla chief executive Elon Musk said he had a "super
bad feeling" about the economy.
Sentiment for both
consumers and the financial markets have slipped recently.
Data shows that the
annual rate of US inflation hit 8.3% in the year to April, which is a slight
drop from the level recorded for March but is the highest rate since 1981.
Analysts said the job
growth in May remained solid, if slower, than over the 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 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."
America's retail
sector shed 61,000 jobs in May
Many economists have
long warned that job growth was bound to slow after months of unusually strong
gains.
Employment in the US
has now nearly recovered to where it was before the Covid-19 pandemic hit in
March 2020, the Labor Department said.
Last month, the
leisure and hospitality sector - which is still catching up from deep cuts made
during Covid restrictions - reported the biggest rise in new jobs, up 84,000.
Retail payrolls fell
by 61,000, but the number of jobs stands higher than it did in pre-pandemic
February 2020.
US President Joe
Biden said Friday 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 like 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 clearly a problem -
inflation."
US President Joe
Biden wished Elon Musk "lots of luck on his trip to the moon".
Asked about the
comments from Mr Musk - with whom the president has a frosty relationship - Mr
Biden said other companies, such as Ford, were announcing plans to hire
thousands more staff as they invest in electric vehicles.
"Lots of luck on
his trip to the moon," he said.
As companies compete
for workers, pay has been rising faster than it has in years. Last month, the
average hourly wage in the US rose to $31.95 (£25.50) last month - up 5.2%
compared to a year ago. However, pay growth is failing to keep up with the
rising cost of living and slowed in May for a second month in a row.
The US Federal
Reserve, like other central banks around the world, 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 in order 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."
Source:BBC