US adds 272,000 jobs, unemployment rises to 4 percent

The U.S. economy added 272,000 jobs in May, and the unemployment rate rose slightly to 4%, according to new Labor Department data released on Friday.

The May employment report was much better than expected by economists, who had projected a gain of 185,000 jobs and an unemployment rate unchanged from April’s 3.9%.

But the slight rise in the unemployment rate marked the end of the longest streak of unemployment below 4% since the 1960s.

The May jobs report was released as the Federal Reserve prepares to decide on interest rates next week. The central bank has kept rates in the 5.25% to 5.5% range since July 2023 and expectations are low that it will start cutting rates this month.

The Federal Reserve raised interest rates to their current 20-year high in an effort to tame the highest inflation in 40 years, which peaked at 9.1% in June 2022 before easing significantly and falling to 3.4% in April.

But inflation remains above target, leading the central bank to repeatedly keep interest rates on hold.

“Following weaker-than-expected April jobs reports, the labor market recovered and remains strong,” Joe Gaffolio, president of Mutual of America Capital Management, said in a statement.

“Given this continued growth, we don’t expect the Fed to cut interest rates anytime soon, especially with inflation remaining above the Fed’s 2 percent target,” Gaffolio added.

Traders currently expect the Fed’s first interest rate announcement to come in September, according to the CME FedWatch tool.

President Biden touted Friday’s strong jobs report, showing 15.6 million jobs added since he took office, and vowed to continue his efforts to lower prices.

“America’s great comeback continues, but we still have much more progress to make,” the president said in a statement, adding that he will “keep fighting to lower costs for families like the one I grew up with in Scranton.”

With interest rates remaining high and Americans continuing to suffer the lingering effects of inflation, Biden is struggling to change Americans’ views on the economy ahead of a rematch with former President Trump in November.

A recent ABC News/Ipsos poll found that more Americans trust Trump than Biden when it comes to the economy and inflation.

When it comes to the economy, 46% say they have confidence in the former president, while only 32% say they have confidence in the current president. When it comes to inflation, 44% say they have confidence in Trump, while 30% say they have confidence in Biden.

That could pose a problem for Biden, who is trailing Trump by just 0.8 percentage points in the Hill Decision Desk polling average.

Last updated at 9:54 a.m. EDT.