Employers added 172,000 jobs in May – roughly double what forecasters had expected – and the unemployment rate remained at a low 4.3%.
The Labor Department reported Friday that job growth was down slightly last month from a revised 179,000 in April. The unemployment rate stayed at a low 4.3%
The job gains last month were broad-based. Local governments added 55,000 workers, restaurants and bars 48,000, healthcare companies 35,000.
In another sign of job market strength, Labor Department revisions added a combined 93,000 jobs in March and April. Job growth averaged 188,000 a month from March through May, marking the best three months of hiring since early 2024.
“The hiring recession is over. American firms are hiring again,’’ said Heather Long, chief economist at Navy Federal Credit Union. “The job rebound is happening in almost every industry … This is encouraging news for job seekers and for the U.S. economy. The labor market has stabilized and is showing early signs of a genuine rebound.’’
With just five months to go before consequential midterm elections in the U.S., Americans have grown increasingly frustrated by rising costs and it’s unclear if the strong job numbers this year will drown that out.
And despite the pickup in hiring, wage gains were modest. Average hourly wages rose 0.3% from April and 3.4% from May 2025, consistent with the Federal Reserve’s 2% inflation target.
Workers, jobseekers and employers have been stuck in an awkward “no-hire, no-fire’’ labor market. “Those who have jobs are clinging to them, while those without are left wanting,” Diane Swonk, chief economist at the tax and consulting firm KPMG, wrote in a commentary ahead of the jobs report. “The result is a sense of being frozen or left in a sort of labor market purgatory.’’
Many young people are finding it tough to break into a stagnant job market. And workers who have been laid off struggle to get back to work. Nearly 28% of the unemployed in April had been jobless for more than six months, biggest share since December 2021.
Last year, employers added 9,700 jobs a month, fewest outside a recession since 2002.
This year, hiring has rebounded, averaging 114,000 new jobs a month from January through May. Big tax refunds — the product of President Donald Trump’s 2025 tax cuts — have given the economy a lift, offsetting the impact of higher energy prices since the United States and Israel attacked Iran in late February. But the refunds have mostly been pocketed, and gasoline prices remain above $4 per gallon.
Healthcare companies have been driving much of hiring over the past year.
Some analysts fear that artificial intelligence will wipe out entry-level jobs. But economists Gregory Daco and Lydia Boussour of the tax and consulting firm EY-Parthenon wrote in a commentary Tuesday that AI “adoption is proving more gradual and costly than many anticipated. Firms are increasingly using AI to enhance productivity and control labor costs.” But AI, they wrote, has reduced hiring rather than “triggering broad-based layoffs.″
U.S. financial markets retreated on the strong jobs data as expectations for an interest rate cut from the Fed continue to fade.