Washington, US (BBN)-The US economy added 280,000 jobs in May, the US Labour Department has said.
The increase was more than analysts had expected and the biggest this year. Economists described it as "encouraging", reports BBC.
The jobless rate, which is based on a different survey, crept up to 5.5 per cent from 5.4 per cent, but this was explained by more people looking for jobs.
Average earnings rose 0.3 per cent compared with the previous month, to $24.96 an hour.
This is a measure closely watched by policymakers as they assess when to start raising interest rates.
Consistently higher wages, as well as the improving jobs market, will add to the argument for a rate increase, which most observers currently expect to happen in September, rather than at its next meeting in June.
More people working more hours and making more money is a very virtuous combination for growth," said Tom Simons from Jefferies.
The May employment report is very encouraging."
RETURN TO GROWTH?
The economy is expected to return to growth in the second quarter, after an unexpected contraction in the first three months of the year.
It shrank by 0.7 per cent between January and March but that was seen by many as an aberration, largely caused by an exceptionally harsh winter and a West Coast ports strike that severely damaged exports.
The Labor Department also revised the jobs figures from March and April.
March was revised up to 119,000 from 85,000 while April was revised a touch lower to 221,000 from 223,000.
It means that over the past three months, companies have added an average of 207,000 jobs.
Job gains occurred in professional and business services, leisure and hospitality, and health care," the Labour Department said.
REACTION
On Thursday, the International Monetary Fund advised the Federal Reserve to hold off raising interest rates until next year.
Only 24 hours later, the IMF's suggestion that the Fed should wait until 2016 looks very dated,'' said Paul Ashworth from Capital Economics.
At this stage, this evident strength in the labour market probably isn't enough to persuade the Fed to hike rates by July, but it definitely makes a rate cut by September probable.''
Chris Williamson, chief economist at the research firm Markit agreed that Friday's figures "raised the likelihood" of a rate increase in September.
But he added that the central bank would "be watching the data keenly in coming months to seek reassurance that the economy is not losing too much momentum, with eyes on the impact of the strong dollar in particular".
The US government welcomed the report, but said it would not be complacent.
“Although the job market has made considerable progress throughout this recovery, challenges remain for our economy and there is more work to do," a statement from the White House said.
BBN/ZI/AD