WASHINGTON — Stronger-than-expected U.S. job growth in May has increased pressure on the Federal Reserve to maintain higher interest rates for longer, as policymakers weigh signs of labor market resilience against persistent inflation concerns.
The U.S. Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose by 172,000 in May, exceeding economists' forecasts of about 85,000 jobs, according to multiple market analyses. The unemployment rate held steady at 4.3 percent.
The data showed upward revisions to prior months, with April revised to 179,000 jobs added and additional positive adjustments for March, the BLS said. Private-sector hiring accounted for much of the gain.
The report comes as the Federal Reserve has held its benchmark interest rate steady in recent months. Fed officials have indicated they are monitoring labor market conditions closely while aiming to bring inflation back to the 2 percent target.
"Providing the labor market does not suffer a dramatic summer jobs scare again, then it looks increasingly likely that the FOMC will enact a couple of insurance hikes later this year," Stephen Brown, chief North America economist for Capital Economics, said in a note following the data release.
The robust employment figures have tempered expectations for near-term rate cuts. Market reactions included shifts in Fed funds futures, with some measures showing increased odds of potential rate hikes later in the year, according to trading data referenced in financial reports.
Economists and analysts noted that while job gains were solid, certain sectors showed mixed performance, including losses in financial activities. Long-term unemployment also edged higher, though overall labor force participation remained relatively stable.
The Fed's next policy meeting is scheduled in the coming weeks. Chair Jerome Powell and other officials have previously emphasized a data-dependent approach, avoiding commitments to specific policy paths amid uncertainties including global economic developments and fiscal factors.
Earlier this year, the central bank had adjusted rates modestly, but recent communications highlighted caution. The May jobs report reinforces a view of a labor market that, while cooling from pandemic-era highs, continues to demonstrate strength.
White House officials welcomed the figures, pointing to them as evidence of economic momentum under current policies. However, some business surveys, including the Fed's Beige Book, have described hiring as selective amid economic uncertainty.
Details on wage growth showed average hourly earnings rising modestly. Broader economic indicators, such as consumer spending and inflation readings, will factor into upcoming Fed deliberations.
As of Friday, no immediate policy shift was announced. The central bank continues to balance its dual mandate of maximum employment and price stability.
