The US economy added a stronger-than-expected 172,000 jobs last month

The US labor market appears to have found its footing: The economy added 172,000 jobs in May, shattering expectations, new data from the Bureau of Labor Statistics showed Friday.

The US economy added 172,000 jobs in May, exceeding the expected 150,000 jobs. The Bureau of Labor Statistics reported that the unemployment rate remained at 3.6%, with notable job gains in the healthcare and transportation sectors. The average hourly earnings for production and nonsupervisory employees increased by 5 cents to $27.33. The labor force participation rate was little changed at 62.3%.

The stronger-than-expected jobs report will likely impact mortgage rates, as the Federal Reserve considers the labor market's strength when making interest rate decisions. Homebuyers and refinancers may see a slight increase in mortgage rates, affecting their monthly payments. For example, a 0.25% increase in mortgage rates could add $25 to the monthly payment on a $200,000 mortgage. This change could influence housing market decisions.

The current labor market strength is a continuation of the trend that started in 2010, with the US economy experiencing its longest expansion on record. The Federal Reserve's decision to cut interest rates in 2020 helped to boost the labor market, and the subsequent economic growth has led to increased job creation. Insiders note that the labor market's resilience is due in part to the growth of the service sector, which has accounted for the majority of job gains. Historically, the US labor market has been sensitive to interest rate changes.

The next major economic indicator to watch is the Consumer Price Index report, scheduled for release on June 10. This report will provide insight into inflationary pressures and may influence the Federal Reserve's decision on interest rates. Notably, some economists predict that the strong labor market may lead to increased wage growth, which could potentially drive inflation higher. The Federal Reserve's next meeting is scheduled for June 15, where they will announce their decision on interest rates.