U.S. economy added 147,000 jobs in May as unemployment rose to 4.2%

The U.S. labor market added 147,000 jobs in May, a modest gain that came in a bit below market expectations, according to the Labor Department. The unemployment rate also moved higher, rising to 4.2% from 4.1% the previous month.

The report points to continued hiring, but at a slower pace than some economists had projected. The increase in unemployment suggests the labor market remains resilient, though signs of cooling are becoming more visible.

May’s numbers will likely shape expectations for the Federal Reserve’s next move on interest rates, especially as policymakers weigh whether the economy is easing enough to reduce inflation without triggering a sharper slowdown.

Even with the softer reading, the latest data show the job market is still expanding. For workers and employers alike, the report signals a labor market that is still solid, but no longer as tight as it was earlier in the recovery.