US employers add 172,000 jobs in May as labor market holds firm

Employers added 172,000 jobs in May, a pace that easily cleared expectations near 80,000 and kept the unemployment rate at 4.3 percent. The report reinforced the economy’s central contradiction: hiring remained strong enough to signal resilience, yet not strong enough to reassure markets that inflation pressures are fading. Federal Reserve Chair Jerome Powell has said inflation has moved up and remains elevated, and the central bank left rates unchanged at its April meeting, keeping pressure on borrowers and on anyone hoping for quick relief in mortgage, auto loan or credit card costs.

The May gain was not just a one-sector story. Leisure and hospitality added 70,000 jobs, local government added 55,000, health care added 35,000 and social assistance added 12,000, showing broader hiring than the narrow gains seen in parts of the past year. April payrolls were revised up to 179,000 from 115,000, and March was lifted to 214,000, making the spring run the strongest three-month advance in more than two years. Even with financial activities declining, the underlying message was that employers kept expanding payrolls rather than pulling back.

Wage growth offered less of a cushion. Average hourly earnings rose 0.3 percent in May and were up 3.4 percent from a year earlier, a steady but not especially fast pace at a moment when households are still absorbing higher prices. The labor force participation rate held at 61.8 percent, suggesting that the supply of available workers stayed stable rather than surging. The household survey showed the unemployment rate unchanged and labor market conditions still sitting in what economists have described as a low-hire, low-fire environment, where firms are not adding staff aggressively but are also avoiding layoffs.

Broader growth data help explain why the labor market has stayed firm. Real gross domestic product rose at a 1.6 percent annualized rate in the first quarter, and the Atlanta Fed’s GDPNow model was tracking second-quarter growth at 3.0 percent on June 1. That combination of steady hiring and solid output argues against an imminent recession, but it also makes a near-term rate cut less likely because the Fed is still balancing maximum employment against stubborn inflation. For markets, the message was clear: the economy is slowing from its post-pandemic pace, but not enough to force the central bank’s hand.