The U.S. created a bigger-than-expected 272,000 new jobs in May, suggesting the economy is still fairly strong and reducing the chances the Federal Reserve will cut interest rates soon.

The unemployment rate, meanwhile, rose to 4% from 3.9%, the first time it's hit that mark since January 2022. More people said they lost their jobs last month, however, and fewer people entered the labor force.

Another large increase in jobs last month likely means the Fed will wait longer to cut interest rates. Wall Street is betting the first reduction won’t take place at least until September.

The Fed was been put off by persistent inflation and it’s looking for signs of slower economic growth before it cuts rates. A slower economy tend to reduce inflation.

There weren't many signs of a slowdown in the May jobs report. Wages, for instance, jumped 14 cents, or 0.4%, to $34.91 an hour.

The yearly increase in wages also moved up to 4.1% from 4%. Wage growth has been stuck around 4% or so since last fall.

Source: Economy creates strong 272,000 new jobs in May. Fed rate cuts are going to have to wait.