The U.S. job market showed continued strength in May, with employers adding 172,000 jobs, according to the Labor Department. This figure is approximately double the expectations of forecasters, and the unemployment rate remained steady at 4.3%. The job growth in May was slightly lower than the revised 179,000 jobs added in April. The report indicates that job growth has rebounded this year, recovering from a decline in 2025, despite ongoing economic uncertainties and high energy prices attributed to the conflict in Iran.
Job gains were broad-based, with local governments adding 55,000 jobs, restaurants and bars contributing 48,000, and healthcare companies adding 35,000 workers. Additionally, revisions to previous months' data revealed an increase of 93,000 jobs in March and April. The average job growth from March to May was 188,000 per month, marking the strongest three-month hiring period since early 2024.
Heather Long, chief economist at Navy Federal Credit Union, commented on the recovery, stating, "The hiring recession is over. American firms are hiring again. The job rebound is happening in almost every industry." However, wage growth remains modest, with average hourly wages rising by 0.3% from April and 3.4% year-over-year, aligning with the Federal Reserve's inflation target of 2%.
Despite the positive job numbers, inflation continues to rise, affecting prices for gasoline, groceries, clothing, and electricity. Polls indicate a decline in President Donald Trump's approval rating regarding the economy, as many Americans express frustration over rising costs.
The labor market remains challenging for certain demographics, particularly young job seekers and those who have been laid off. Nearly 28% of the unemployed in April had been jobless for over six months, the highest proportion since December 2021. Additionally, the number of people quitting their jobs dropped to the lowest level since August 2020, indicating a reluctance among workers to seek new opportunities.
Healthcare has been a significant driver of job growth, with experts noting that the aging population requires more medical services. The report also highlights that the demand for new jobs has decreased due to fewer immigrants and the retirement of Baby Boomers, leading to a lower break-even point for job creation.
Concerns about artificial intelligence impacting entry-level jobs persist, but some analysts suggest that AI adoption is slower than expected, primarily enhancing productivity rather than causing widespread layoffs. Furthermore, a study from the Federal Reserve Bank of New York points to remote work as a barrier for new graduates entering the job market, as businesses find it more challenging to train employees remotely.
Following the jobs report, U.S. financial markets experienced a decline as expectations for an interest rate cut from the Federal Reserve diminished.
