May NFP Blows Past Expectations

Payrolls climbed in May by the most in five months and worker pay accelerated, showing companies were upbeat about the U.S. economy’s prospects after an early-year slump.

The 280,000 advance in payrolls exceeded the median forecast in a Bloomberg survey and followed a revised 221,000 April increase, figures from the Labor Department showed Friday in Washington. The median forecast called for a 226,000 May gain. The unemployment rate crept up to 5.5 percent as more people entered the labor force, while hourly earnings rose from a year ago by the most since August 2013.

Such job gains show corporate managers are convinced the economy is regaining its footing following a first quarter that was beset by temporary headwinds including a labor dispute at western U.S. ports. A dwindling in the ranks of the unemployed would be consistent with forecasts the Federal Reserve will raise its benchmark interest rate later this year.

“Payrolls have remained pretty resilient, which suggests growth should resume in the end of the year,” Laura Rosner, a U.S. economist at BNP Paribas SA in New York and a former New York Fed researcher, said before the report. Such job gains “will make policy makers more confident that the shocks in the first quarter really are temporary.”
Employment accelerated in May at automakers, local government agencies, retailers and temporary-help agencies.

Average hourly earnings increased 0.3 percent from the prior month. They were up 2.3 percent from May 2014, exceeding the average gain since the current expansion began six years ago.

Bloomberg

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