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U.S. marks strong jobs growth in May

U.S. job growth likely increased solidly in May, with wage gains expected to pick up, showing strength in the labor market before an escalation in trade tensions that analysts have cautioned could pressure an already slowing economy.

But the strong employment report from the Labor Department on Friday will probably do little to dial back market expectations that the Federal Reserve will cut interest rates this year.

Nonfarm payrolls probably increased by 185,000 jobs last month after surging 263,000 in April, according to a survey of economists. That would be well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

Manufacturing payrolls will be watched closely for signs of the impact of the tariffs on the economy.

But May’s job growth could disappoint after a report on Wednesday from payrolls processing firm ADP showed the smallest gain in private payrolls in nine years last month.

Monthly wage growth is expected to have pushed higher in May, with average hourly earnings forecast increasing 0.3% after rising 0.2% in April. Wages were forecast advancing 3.2% in the 12 months to May.

Financial markets are pricing in two rate cuts this year. Despite slower job growth as workers become more scarce, labor market strength is likely to support the economy. Growth is cooling as the massive stimulus from last year’s tax cuts and spending increases fades.

The unemployment rate is expected to have remained near a 50-year low of 3.6% in May.