U.S. job growth surged in May, with upward revisions for prior months, reducing expectations for Federal Reserve rate cuts this year.
The U.S. economy added 172,000 jobs in May, far exceeding forecasts of 80,000, while April and March figures were revised upward to 179,000 and 214,000, respectively. The unemployment rate held steady at 4.3%, signaling persistent labor market strength despite recent layoffs tied to AI and other sectors.
Prior expectations for Federal Reserve rate cuts this summer have evaporated as inflation remains elevated and economic activity proves resilient. Markets had priced in easing as a catalyst for growth, but the latest data suggests the Fed may delay cuts or even consider further hikes.
Investors are reassessing positions as the shift in rate expectations alters the outlook for equities and bonds. The stronger-than-expected jobs report reinforces concerns about prolonged higher rates, weighing on risk assets.