U.S. employers added 172,000 jobs in May, the Labor Department reported Friday, easing concerns that the economy may be slowing under the weight of rising inflation.
The hiring numbers were more than double those expected by economists polled by The Wall Street Journal. The unemployment rate held steady at 4.3%, meeting expectations.
The data for previous months was revised higher, as well, indicating that the labor market has been stronger than previously understood. Job growth in March was revised upward by 29,000 to a healthy 214,000, while April’s gains were revised upward by 64,000 to 179,000.
Where the jobs are: Growth was concentrated in the leisure and hospitality sector, which added about 70,000 jobs in May, far exceeding the 14,000 monthly average over the previous year. The big jump in jobs at hotels and restaurants could be driven by preparations for the World Cup, which kicks off in North America this month.
Local government employment grew significantly, as well, adding 55,000 jobs. And healthcare employment continued to expand, adding 35,000 jobs, with another 12,000 in social assistance.
What the analysts are saying: The May numbers, combined with the upward revisions for March and April, suggest that the labor market may be climbing out of a period of stagnation that began when President Trump imposed sharply higher tariffs on trading partners in April 2025.
“Despite everything going on in the world around us, America’s employers are regaining their confidence,” economist Guy Berger of Homebase wrote Friday, per Politico. “And that confidence is leading to the rising turnover we see in our data.”
Navy Federal Credit Union Chief Economist Heather Long put it simply: “The hiring recession is over,” she wrote on X. “More firms are hiring again.”
The White House was pleased with the numbers, too, hailing the “OUTSTANDING JOBS NUMBERS!” in a post on X.
Inflation persists: Although the job numbers were impressive, the report indicates that inflation is still very much a problem, at least as far as wages are concerned. Wages grew 3.4% over the last year, below the level of inflation — which means workers are worse off on average due to the surge in prices.
The inflationary wave will certainly be a major issue for the Federal Reserve, and stocks tumbled Friday as traders mulled the growing odds that the central bank will not only have to delay interest rate cuts but may have to raise rates at some point this summer. Odds of a rate hike by the end of the year rose during the day.
Economists at Goldman Sachs told clients that they no longer expect the Fed to cut rates this year and now see the bank delaying further cuts from December 2026 and March 2027 to June and December of next year, buying time to better gauge the effects of Trump’s tariffs, the AI revolution, higher oil prices and other consequences of the Iran war. The economists raised their odds of Fed rate hikes from 10% to 20%.
The CME FedWatch tool showed markets now placing a far higher chance of a rate hike in December: 50%, up from 26% a month ago.
Democrats also took notice of the downbeat wage data. “Wage growth isn’t keeping up with inflation,” Sen. Elizabeth Warren said. “Trump’s failing economic agenda is shrinking families’ paychecks.”