Job growth rose unexpectedly in May as the U.S. labor market continued a strong year of growth, the Bureau of Labor Statistics reported on Friday.
Nonfarm payrolls topped a seasonally adjusted 172,000, down slightly from the 179,000 revised high in April and above the Dow Jones consensus estimate of 80,000. The unemployment rate remained steady at 4.3%, as expected.
“This is a stronger labor market than last year and it looks strong, despite higher prices and lower inflation in general,” said Gus Faucher, chief economist at PNC. “There is no indication that the labor market needs support.”
The breadth of job gains improved in May, as many sectors saw strong growth.
Leisure and hospitality led all sectors with 70,000 jobs, up from last year’s average of 14,000 per month. Local government added 55,000.
Health care, which has been the leading sector, contributed 35,000 new jobs, roughly in line with its average. Public assistance added 12,000.
Average hourly earnings rose 0.3% in the month and rose 3.4% last year, both in line with the Wall Street consensus.
The report came amid muted expectations as tenants braced themselves for the low-rent, low-fire situation. While job gains have been concentrated in just a few sectors, layoffs have also been moderate, although other signs are building that artificial intelligence is having an impact on workforces.
In addition to May’s strong job numbers, reviews of previous months also presented an even better picture. April’s figures represent more than 64,000 updates while March’s strength reached 214,000, a gain of 29,000.
Last summer, President Donald Trump, angered by weak job numbers and high-profile downgrades, fired the BLS commissioner and installed William J. Wiatrowski as acting chief.
“The hiring slump is over. American firms are hiring again,” said Heather Long, an economist at Navy Federal Credit Union. “This is a strong jobs report from all quarters.”
Stock market futures were not very positive after the release, while Treasury yields rose sharply.
The household survey, which is used to calculate the unemployment rate, also showed a strong labor market, with the number of people employed rising by 149,000. The labor force participation rate remained strong at 61.8%, while the broad unemployment rate, which includes discouraged workers and those working part-time for economic reasons, fell to 8.1%.
The consensus activity numbers above are likely to further prevent the Federal Reserve from lowering interest rates anytime soon.
“More tight jobs data leaves the Fed where it’s been for a while — watch and wait, focusing on the inflationary side of its mandate,” said Ellen Zentner, chief economist at Morgan Stanley Wealth Management. “A rate cut is not in the near term, but the lack of inflationary threats in today’s report should quiet some of the talk about a potential hike.”
In recent days, Fed officials have been more bullish on the picture of workers, focusing more on the worrisome inflation problem that has largely taken the prospect of further interest rate cuts off the table. The central bank has been in a position to intervene this year after lowering benchmark rates by three-quarters of a point in the last quarter of 2025.
The Fed’s policymakers are more conservative about waiting to see how developments play out this year before committing to a policy path.
Broad economic growth was strong, with gross domestic product rising at a record annual rate of 1.6% in the first quarter and so far tracking a 3% gain in the second quarter, according to the Atlanta Fed.
