Job growth unexpectedly surged in May as the U.S. labor market continued a solid year of expansion, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls jumped a seasonally adjusted 172,000 for the period, down slightly from the upwardly revised 179,000 in April and far above the Dow Jones consensus estimate for 80,000. The unemployment rate held steady at 4.3%, as expected.
“This is a labor market that is stronger than it was last year and is looking pretty darn solid, despite high energy prices and higher inflation generally,” said Gus Faucher, chief economist at PNC. “There’s no indication that the labor market needs support.”
Breadth of job gains improved in May, with multiple sectors seeing solid advances.
Leisure and hospitality led all sectors with 70,000 jobs, well above the 14,000 per month average over the past year and a possible reaction to hiring needed for the World Cup.
Local government added 55,000.
Health care, which has been the leading sector, contributed 35,000 new hires, about in line with its average. Social assistance added 12,000.
Average hourly earnings rose 0.3% for the month and were up 3.4% over the past year, both in line with the Wall Street consensus.
The report came against a background of muted expectations as employers have held their ground in a low-hire, low-fire environment. While job gains have been largely concentrated in just a few sectors, layoffs also have been moderate, though some signs are building that artificial intelligence is having an impact on labor rolls.
In addition to the strong jobs numbers for May, revisions for prior months also presented an even better picture. The April tally represented an upward revision of 64,000, while March got a boost up to 214,000, a gain of 29,000.
Last summer, President Donald Trump, angered by weak jobs numbers and high downward revisions, fired the BLS commissioner and installed William J. Wiatrowski as the acting chief.
“The hiring recession is over. American firms are hiring again,” said Heather Long, chief economist at Navy Federal Credit Union. “This is a strong jobs report from every angle.”
Stock market futures were mostly negative following the release, while Treasury yields move sharply higher.
The household survey, which is used to calculate the unemployment rate, also reflected a solid labor market, with the rolls of the employed rising by 149,000. The labor force participation rate was steady at 61.8%, while a broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 8.1%.
The above-consensus jobs numbers are likely to further deter the Federal Reserve from lowering interest rates anytime soon.
“More solid jobs data leaves the Fed where it’s been for a while — watching and waiting, focused on the inflation side of its mandate,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Rate cuts still aren’t on the near-term horizon, but the absence of inflationary threats in today’s report should quiet some of the chatter about a potential hike.”
In recent days, Fed officials have become more sanguine on the labor picture, turning their attention more to a nettlesome inflation problem that has largely taken the prospect for additional interest rate cuts off the table. The central bank has been in a holding pattern this year after lowering benchmark rates by three-quarters of a percentage point during the latter part of 2025.
Fed policymakers largely have stuck to a narrative of waiting to see how developments play out this year before committing to a policy path.
Broader economic growth has been solid, with gross domestic product rising at a 1.6% annualized rate in the first quarter and thus far tracking at a 3% gain in the second quarter, according to the Atlanta Fed.
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