The US labor market continues to surprise.

Data from Bureau of Labor Statistics out Friday showed there were 339,000 jobs created in May, topping Wall Street estimates for 195,000.

This marked the 14th-straight month that job creation came in above what Wall Street economists had expected and the largest monthly increase since January.

The data sent stocks higher on Friday as investors continued to expect a pause in the Federal Reserve's interest rate hike campaign will be announced later this month.

Following this report, many Wall Street economists suggested the uptick in the unemployment rate to 3.7% and the deceleration in hourly wages — which rose 4.3% over last year compared to 4.4% in April — as signs the Federal Reserve is beginning to see the "better balance," Federal Reserve chair Jerome Powell has frequently referenced. Others, however, were shocked by the jobs numbers.

As Allianz Investment Management's Charles Ripley put it, Friday's jobs report had a "a little flavor for everyone."

Ian Shepherdson, chief economist, Pantheon Macroeconomics

"This is the strangest employment report for some time... [R]ight now the data suggest that economic growth is stronger than is indicated by most other monthly data. The downward trend in job growth since the summer of 2021 now appears to have flattened-off, though that could change with revisions.

"As for the Fed: This is a nightmare report."

Michael Gapen, US economist, Bank of America Global Research

"Nonfarm payrolls are the elephant in the room. The strength in this metric alone means that a June hike remains on the table in the event of a very strong CPI report on June 13, even if it is not the base case at the moment. And perhaps more important, the continued resilience of the labor market means there is still a strong case for additional hikes later in the year."

Sarah House, senior economist, Wells Fargo

"Some softening in the trend of wage growth offered additional evidence that the labor market is continuing to cool, albeit gradually."

Steve Rick, chief economist, TruStage

"As we head into the second half of 2023, we expect a mild downturn as a result of the interest rate hikes and slower consumer spending. Despite last month's rate hike, this month’s strong report indicates that interest rate hikes have yet to impact tight unemployment conditions."

Paul Ashworth, chief North America economist, Capital Economics

"The bigger-than-expected 339,000 increase in non-farm payroll employment in May will dominate the headlines, but the employment report was not all positive — with a big drop in the household survey measure of employment driving the unemployment rate up to a seven-month high of 3.7% and average weekly hours worked edging down to a three-year low.

"The upshot is that the Fed can still afford to skip a rate hike in June."

Christopher Rupkey, chief economist, FWDBONDS

"Don’t be fooled by the jump in the unemployment rate from the April 3.4% best and lowest since the 1960s to 3.7% this month, along with the Household Survey saying employment actually fell 310K in May, this labor market is strong as a bull and the economy is miles away from the cliffs of recession.

"... Whatever you want to call it, be patient, watch and wait, pause, or skip a meeting, the Fed can’t afford to pass on a rate hike at the June meeting as the labor market is just too darn strong. If you believe in economics textbooks at all, the labor market is too tight despite the odd three-tenths increase in the unemployment rate today. Skip it and kick the can down the road for another meeting later on this year is just bad policy. Bet on it."

Kathy Bostjancic, chief economist, Nationwide

"From the Fed’s perspective, we have heard from many voting members of the FOMC that they are inclined to skip tightening in June but could resume tightening in July. Today's strong employment readings support that action, but key will be the CPI report due out on June 13 — the first day of the Fed's two-day meeting."

"From our lens, the continued strength in employment pushes back the start of a prospective recession but does not eliminate that likelihood since leading indicators continue to point towards a recession. And if the economy remains too hot to meaningfully slow inflation, the Fed will simply raise rates higher, still a path towards a downturn."

Ellen Zentner, chief US economist, Morgan Stanley

"May payrolls were well above expectations, but households reported a significant loss of jobs. The report today continues to point to a soft landing for the economy and should keep market expectations for a July hike in play."

Lydia Boussour, senior economist, EY

"The labor market has become difficult to decipher but recent data along with our conversations with business executives indicate that labor market conditions are softer than the headline payroll print suggests. We continue to anticipate a deterioration in labor market conditions in coming months featuring hiring freezes, strategic resizing decisions and wage growth compression."

Nancy Vanden Houten, lead US economist, and Ryan Sweet, chief US economist, at Oxford Economics

"The Fed welcomes any sign of easing wage pressures, but wage growth is still too far from the roughly 3.5% y/y pace the Fed sees as consistent with its 2% inflation target.

"The prime-age employment-to-population ratio, our preferred measure labor market tightness, slipped to 80.7% in May from 80.8%, leaving it above the 80.0% that has historically been consistent with an economy at full employment."

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