(Bloomberg) — 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 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.
“This only reinforces the view that the economy is a lot healthier than the GDP data imply,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, whose projection for a 275,000 gain was among the closest in the Bloomberg survey. “I’m pretty confident the unemployment rate will go back down again soon.”
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Stocks were little changed as the jobs data bolstered the case for higher interest rates this year. The Standard & Poor’s 500 Index rose 0.1 percent to 2,098.43 at 10:07 a.m. in New York. The dollar strengthened and Treasuries declined.
Employment accelerated in May at automakers, local government agencies, retailers and temporary-help agencies. Restaurants, hotels and builders also boosted headcounts in May, the Labor Department report showed.
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.
Payroll estimates in the Bloomberg survey of 96 economists ranged from increases of 140,000 to 305,000 after a previously reported April advance of 223,000. Revisions to prior reports added a total of 32,000 jobs to overall payrolls in April and March.
To calculate the data, the Labor Department surveys businesses and households for the pay period that includes the 12th of the month. Participation rate
The agency’s survey of households, used to derive the unemployment rate, showed the participation rate, which indicates the share of working-age people in the labor force, increased to 62.9 percent from 62.8 percent in April.
Employment at government agencies rose 18,000 in May, mostly due to increased hiring at municipalities. Automakers took on another 6,600 worker, while builder payrolls rose 17,000.
Retailers hired a net 31,400 workers and employment in leisure and hospitality jumped 57,000. Payrolls at temporary- help agencies climbed 20,100.
Amazon.com Inc. is among companies confident enough in the business outlook to announce hiring plans. The Seattle-based online retailer expects to invest “several hundred million dollars” to build facilities in Ohio, adding more than 1,000 full-time jobs over the next few years, Paul Misener, Amazon.com vice president of global public policy, said May 29.