US employers added 280,000 jobs last month, after a revised increase of 221,000 jobs in April as the unemployment rate ticked up to 5.5 percent.
Employment is one of the most important pieces of data and the Federal Reserve is monitoring it closely. The positive figure has been interpreted to suggest that the Fed is on track to hike interest rates this year.
While a total of 280,000 jobs were created last month, US employers added 262,000 jobs in the private sector.
Moreover, 6,383,000 jobs were established in the construction sector adding a further 45,000 compared to the previous month.
Similarly, wages rose at a healthy pace, as hourly earnings took the year-on-year gain to 2.3 percent. Wages are expected to rise further amid demand for entry-level workers and finer composition of jobs.
Many states in the US have increased minimum wages while some firms have increased their employees’ pay.
Walmart, one of the largest private employers in the US, has recently stated that it will increase the minimal wages for the second time this year for more than 100,000 US workers.
The Fed has kept its overnight rates at historically low levels since December 2008. The central bank’s policymakers will meet between June 16-17, however a rate hike in June was ruled out according to the minutes of the Federal Open Market Committee (FOMC) meeting in April.
The slowdown in the economy has left financial markets doubting whether the Fed will raise rates this year, if at all. Some believe the Fed could wait until 2016 for the rate hike.
A warning came from the International Monetary Fund (IMF) on Thursday regarding tighter monetary policies in the world’s biggest economy.
The IMF said that until there are clearer signs of a sustained recovery, the Fed should defer a much anticipated rate hike until mid 2016.