Labor Department data shows non-farm payroll employment increasing by 175,000 positions in May with job growth noted in professional and business services, food services, drinking places and retail trade.
The jobs data was more anticipated than usual this time around. Federal Reserve chairman Ben Bernanke indicated on May 22 that the ultimate decision for the government to begin pulling out of its quantitative easing would be one based on economic strength.
With the nation experiencing slight employment growth in May, the current economic trajectory leaves room for the Fed to taper its acquisitions of mortgage-backed securities and Treasurys later this year, analysts claim.
Despite payrolls growing more than expected after early projections of 165,000 positions, unemployment remained at 7.6%.
"We think this leaves the Fed on track to taper QE3 later this year. May’s gain was better than April’s 149,000 rise (revised down from 165,000) and takes jobs growth a bit closer to the monthly average of 200,000 seen in the previous six months," Capital Economics said.
But risks remain. Manufacturing payrolls fell by 8,000 jobs in May and government payrolls fell by 3,000 positions.
The hit from falling federal government employment would have been worse if local governments had not added 13,000 workers, Capital Economics suggested.
The research firm sets a monthly payroll increase of 179,000 as the benchmark for an economy that is growing roughly 2% per year.
Average hours worked remained at 34.4 and hourly earnings stayed the same.
"The weak tone of the recent survey evidence suggests payrolls may weaken a bit in the coming months," Capital Economics added. "But we don’t think it will be long before they return to gains of around 180,000 a month. If that is the case by the time the Fed meets in September, then it will probably trim the pace of its monthly asset purchases."