US Job Addition Better Than Expected in May; Wages Up 2.3%

Washington: The US economy pumped out 280,000 jobs in May, the Labor Department announced Friday, far more than expected in a solid sign of growth after a winter stall.

Businesses in health care, retail sales and tourism hired new workers generously during the month, and firm gains also came in construction and government.

Wages also rose a solid 2.3 per cent from a year ago, in a long-awaited sign that the jobs market could be tightening. The pace of gains of the last three months was 2.9 per cent, the fastest since 2009.

Other numbers also suggested a stronger market: figures for short-term unemployed and labour market dropouts also fell significantly.

But the unemployment rate, which is based on a separate set of data from the job creation numbers, ticked up slightly to 5.5 per cent.

Analysts said the rate represented, in addition to new entrants, that more people are returning to the labor market after having dropped out, with most but not all of them finding jobs.

The labour force grew by nearly 400,000 in the month, and was 1.8 million above a year earlier.

Economists called the May jobs report unambiguously good, with the number of new jobs well above the average of the previous 12 months of 251,000.

It eased worries that the contraction during the January-March period was spilling over into the current quarter.

"The economy shows signs of rebounding strongly from the weak spell seen at the start of the year, pulling wages higher and allaying worries that the upturn [is not] sustainable," said Chris Williamson, chief economist at Markit.

Ian Shepherdson of Pantheon Macroeconomics noted that on top of the May numbers, the job creation figures for the previous two months were revised upwards by a net 32,000.

"If payrolls continue to rise at anything like this pace - and every indicator we follow says they will... the unemployment rate will continue to trend downwards rapidly."

Most analysts expected a figure of only about 225,000 new jobs in May, in part based on other weaker data that showed US consumers still reticent about spending in recent months despite gains in household spending power, a phenomenon that has puzzled economists.

But if the gains in wages are sustained, many think consumers could begin to loosen their purse-strings.

That appeared evident in the surge of auto sales last month to their best level in a decade, and expectations of a strong summer for the tourism and entertainment industries.