The economy added 172,000 new payroll jobs in May, the Bureau of Labor Statistics reported Friday, as businesses shrugged off the energy supply shock from the war with Iran.
The unemployment rate remained at 4.3%.
Forecasters had expected payroll job growth to slow to 85,000.
Instead, it accelerated, and previous months’ job gains were revised up.
Dan North, a senior economist with Allianz Trade Americas, told the Washington Examiner that the report is a “pretty strong” indication that the labor market is a bit healthier than economists had thought. He also pointed out strong reports in the preceding months where job growth was over 100,000.
“Not just beat expectations, but rock and roll,” North said. “I mean, three months in a row, it’s been really impressive.”
Friday’s report is likely to provide a shot in the arm for President Donald Trump, who has been weighed down by historically low consumer sentiment.
The conflict with Iran and the halt of oil tankers through the Strait of Hormuz darkened the economic picture over the course of May.
The run-up in energy prices from the supply chain disruptions pushed up inflation heading into the month. The price of a gallon of regular gas, for instance, rose from around $3 in February to above $4 by the end of May.
The surge in inflation has complicated matters for the Federal Reserve. Investors now see little chance for a cut in the central bank’s interest rate target this year. Market odds now see a greater likelihood that the Fed will instead raise rates this year, to tamp down inflation, even though the newly installed chairman, Kevin Warsh, was appointed by Trump, who has called repeatedly over the past year for lower rates.
Yet other economic indicators suggest underlying strength.
Retail sales have been strong despite the low consumer sentiment recorded in surveys. Industrial production, too, has been robust through the spring.
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Republicans are hoping that the boost from the tax cut bill signed by Trump in July will help allay voter fears about the economy and buoy the party in the midterm elections. Democrats, meanwhile, are hammering Trump and the GOP on the rising cost of living — the same factor that doomed President Joe Biden in his bid for reelection.