Employment increased more than forecast in May and the jobless rate climbed from a four-year low as more Americans entered the labor force, showing the world’s largest economy weathered the effects of higher taxes and federal budget cuts.
Payrolls rose 175,000 last month after a revised 149,000 increase in April that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey called for a 163,000 gain. The unemployment rate rose to 7.6 percent from 7.5 percent.
The improvement in the labor market is a sign companies are looking beyond fiscal restraint this quarter and are optimistic enough about the prospects for demand in the second half of the year. At the same time, bigger job and wage gains are needed to move Federal Reserve policy makers closer to scaling back record monetary stimulus.
“It’s a gradual improvement in the labor market, and we expect more of the same in coming months,” Yelena Shulyatyeva, a U.S. economist at BNP Paribas SA in New York, said before the report. “The Fed stays the course.”
Retailers added jobs in May. Employment also increased at construction companies, education and health services, leisure and hospitality businesses and temporary-help agencies. Manufacturers cut jobs for a third month.
While Americans are finding work, wage gains aren’t picking up. Average hourly earnings were little changed at $23.89 in May after $23.88 in the prior month. They were up 2 percent in 12 months ended in May, the same as in April.
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