U.S. employers added more-than-expected 272,000 jobs in May, with the unemployment rate ticking up to 4.0 percent, the U.S. Labor Department reported on Friday.

Employment continued to trend up in several industries, led by health care, government, leisure and hospitality, as well as professional, scientific, and technical services.

Total nonfarm payroll employment increased by 272,000 in May, higher than the average monthly gain of 232,000 over the prior 12 months.

The change in total nonfarm payroll employment for March was revised down by 5,000, to a gain of 310,000, and the change for April was revised down by 10,000, to a gain of 165,000. With these revisions, employment in March and April combined is 15,000 lower than previously reported.

In February, the unemployment rate increased to 3.9 percent, the highest level in two years, before slightly dropping to 3.8 percent in March. In April, the unemployment rate again edged up to 3.9 percent.

The bureau previously noted that the unemployment rate had been in a narrow range of 3.7 percent to 3.9 percent since August 2023. The latest 4.0 percent unemployment rate is the highest reading since January 2022.

"The unemployment rate rising is causing some jitters for labor economists worried about a cooling labor market slipping into a downturn," according to a report by The New York Times.

"Today's employment data likely will keep the Fed in a wait-and-see mode at its meeting next week," Sarah House and Michael Pugliese, economists at Wells Fargo Securities, wrote in a note.

"Policymakers will need to see a few slower inflation reports over the summer in order to start cutting rates by the fall, and all eyes now turn to next week's CPI report, to be released on the same day as the conclusion of the Federal Open Market Committee meeting," they added.