WSJ's Sudeep Reddy and Phil Izzo join the News Hub's Simon Constable to bring you full coverage and analysis of the May jobs report. May's unemployment rate is 6.3% and 217,000 new jobs have been added to the U.S. economy. Photo: Getty
WASHINGTON—Employers hired steadily in May, placing the U.S. on the one of the best four-month stretches of job creation since late 1990s and renewing optimism about the five-year-long recovery.
Nonfarm employment advanced a seasonally adjusted 217,000 last month, the Labor Department said Friday. April's gain was revised down slightly, but the increase of 282,000 was the best in more than two years. The U.S. economy has added at least 200,000 jobs each month since February, the longest such stretch since September 1999 to January 2000.
The jobless rate, obtained from a separate survey of households, was unchanged at 6.3% in May, matching the lowest level since September 2008. However, the share of Americans participating in the labor force held steady near its lowest level since the late 1970s, at 62.8% in May.
"There's no doubt the rate of job creation has accelerated as the labor market has improved," said Dan Greenhaus, chief strategist for investment firm BTIG LLC. "But there remains a fair bit of slack in the labor market."
The labor market also reached a milestone last month. Total U.S. payrolls exceeded the country's previous peak level of employment set in January 2008.
However, the makeup of jobs has shifted since the recession began. The share of Americans working in manufacturing, construction and for the government—typically good-paying fields—has fallen, while more are working in the leisure and hospitality sector and other generally lower-paying service jobs.
Still, steadier job growth in recent months will put more money into consumers' pockets and improve confidence, which could support stronger economic gains later in the year.

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Kathleen Madigan joins MoneyBeat to delve deeper into the data from the May jobs report. Photo: Getty Images.

Central Bank Watch

Here is how the central banks in four major advanced economies have moved two key levers of monetary policy in recent years, and how two important economic indicators have responded. View the interactive.

Grand Central

The U.S. economy has grown at a little better than 2% pace since the recovery began in mid-2009. In the second half of last year, growth improved to a 3.4% pace, raising hopes for a breakout. But a brutal winter caused first-quarter growth to shrink at an annualized 1% rate, the Commerce Department said last week.
Forecasting firm Macroeconomic Advisers this week projected the economy to grow at a 3.9% pace in the second quarter.
The improving outlook for job gains and economic growth should bring some comfort to Federal Reserve officials, but sorting through underlying measures of the labor market's health could be difficult ahead of their June 17-18 policy meetings. The jobless rate is down 1.2 percentage points from a year earlier, typically a sign of an improving labor market. But the labor-force participation rate has fallen 0.6 percentage point over the same time.
The average hourly wage for private sector workers rose a nickel in May to $24.38. While the increase suggests some willingness on the part of employers to lift workers' pay, the gain is just 2.1% above the year-earlier level, staying only slightly ahead of inflation.
How the Fed interprets the strength of the labor market could influence the central bank's winding down its bond-buying program this year and raising its benchmark interest rate, which has been near zero since December 2008.
May's report indicates "that labor market slack is diminishing, albeit slowly and that wage growth remains subdued," said Bricklin Dwyer, an economist with BNP Paribas. BNP.FR +0.84% Those factors suggest the Fed has "latitude to maintain an easy policy stance."
A broader measure of unemployment that includes those working part-time but who would prefer full-time jobs fell slightly to 12.2% in May from 12.3% in April. The share of Americans out of work for more than 27 weeks decline in May, but remained historically high at 34.6%
Service-sector jobs once again led job growth. The health-care and social-assistance category added 39,000 jobs. Retailers added 12,500 jobs and the transportation and warehousing sector added 16,400.
Manufacturing added 10,000 jobs and the construction industry added 6,000.
Government employment held nearly flat last month because increasing local government jobs were mostly offset by cuts at the federal and state levels.

A Historical View

U.S. unemployment since 1948
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Write to Eric Morath at eric.morath@wsj.com and Jonathan House at jonathan.house@wsj.com
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US Jobs Data Show Strong Four-Month Hiring Clip

 

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