US employers added 172,000 jobs in May, an unexpectedly strong showing

The U.S. economy added 172,000 jobs in May, a surprisingly strong gain for the economy, even as employers grapple with elevated prices.

The unemployment rate held at 4.3%, a low level, according to data released Friday by the Bureau of Labor Statistics.

The May report blew past estimates of around 80,000 job gains, as the economy shows early signs of momentum after a patch of job losses in the fall and winter.

The economy also picked up more jobs than expected in March and April. The Bureau of Labor Statistics revised those months up by 93,000 jobs combined, far more than originally reported.

The report marks the first time the economy has added jobs for three consecutive months since last spring, even as American consumers feel increasingly down about the economy. Employers have added more than 100,000 jobs per month on average so far in 2026, a massive jump from last year’s bleak job creation, even though the economy needs few new jobs to keep up with population growth.

Some economists say it’s too early to declare a hiring recovery, as the economy faces myriad headwinds and unemployed Americans struggle to find work.

“Today’s report was unambiguously good,” said Laura Ullrich, Indeed’s director of economic research. “We did see more broad-based [job] increases than what we’ve seen in more recent months. … But it’s important to, like, acknowledge the fact that we’re still in a reality that is grim for many jobseekers.”

The stronger than anticipated jobs data gives the Federal Reserve more reason to keep interest rates steady — or even consider a future rate hike — as the central bank grapples with rising inflation fueled by the closure of the Strait of Hormuz. The Fed will meet again in about two weeks.

Major stock indexes tumbled on news of Friday’s strong job gains, and Treasury yields surged, as investors bet on increasing odds of an interest rate hike.

Meanwhile, the Trump administration rushed to praised the strong job gains. “OUTSTANDING JOBS NUMBERS!” the White House posted on X Friday morning.

Leisure and hospitality led job gains, adding 70,000 positions in May, well above recent monthly average job growth, as businesses prepare for the summer vacation and the upcoming World Cup. A bout of good weather in May also could have helped boost hiring.

Local government payrolls jumped by 55,000 jobs, mostly outside of education. Health care added 35,000 positions, reflecting strong demand from aging baby boomers.

Joe Brusuelas, chief economist at RSM, attributed the surge in hiring at restaurants and bars to seasonal trends.

“It’s simply summer. Demand for airfares has not diminished at the major airlines despite the price shock, and seasonal increases in hiring are moving forward,” he said.

The financial sector shed 22,000 positions and has lost more than 100,000 jobs over the past year. Other white-collar sectors showed little growth, as companies appear to be increasingly investing in artificial technology rather over hiring.

“We don’t have a lot of evidence that AI is actually doing a lot work that humans were doing,” said Ullrich, the Indeed economist. “However, I do believe that investment in AI and other technology is offsetting labor investment.”

In May, there was little or no job creation in transportation, warehousing, construction, manufacturing and retail. Air transportation shed 9,000 jobs, largely reflecting the closure of Spirit Airlines. But federal government payrolls began to stabilize after undergoing massive job cuts by the Trump administration last year.

Average hourly wage growth over the past year slowed slightly in May, rising 3.4% over the past 12 months to $37.53 an hour. This marks the slowest pace since 2021. After years of real gains, wage growth is no longer keeping up with inflation, at 3.8%, adding new strain to Americans’ pocketbooks.

Some economists say that the labor market may not be quite as optimistic as May’s job figures suggest. The pace of hiring remains near the lowest level since the height of the pandemic, according to separate Labor Department data released this week. The number of Americans unemployed for 27 weeks or more rose to the highest level since 2022 in May, as laid-off workers and college graduates struggle to find work.

Meanwhile, the number of Americans filing for unemployment benefits, a proxy for rising joblessness, rose to the highest level in four months last week, according to another Labor Department report released Thursday.

The full effects of the war with Iran are still seeping into the economy. But if inflation, especially gas prices, continue to rise, consumers could pull back on spending, pushing up the unemployment rate in future months, economists say.

For now, consumer spending remains hardy despite sour attitudes, as some Americans are flush with cash from robust tax returns and a rising stock market. In health care, where demand for labor remains persistently strong, workers continue to receive hefty wage gains.

Patrice Aljoe, 38, a nurse at Florida Medical Center in Fort Lauderdale, said her union recently won a 12% raise over three years after threatening to strike. The pay bump will allow her to take a vacation and ease the burden of her mortgage and student loans.

“Everything’s increased, basic staples such as milk and eggs, so we needed that [pay bump] in order to pay for basic necessities,” Aljoe said.