US Job Growth Unexpectedly Surged in May

U.S. employers reported adding 172,000 jobs in May, much more than expected, and the unemployment rate held at 4.3%, according to the latest employment report from the U.S. Bureau of Labor Statistics (BLS).

Further, job growth in April and March was significantly stronger than earlier reported. March’s job gains were revised up by 29,000 to 214,000 — and April’s payroll gain was revised up by 64,000 to 179,000, suggesting the U.S. labor market is steadily recovering from its weak showing in 2025.

“May’s job gains significantly exceeded expectations and reinforces the resilience of the labor market,” said Geno Cutolo, president of Adecco North America. “Today’s report demonstrates that employers continue to invest in talent and support job growth across key sectors of the economy.”

BLS data from earlier this week showed a surprise jump in job openings for April, but the level of those quitting their jobs is at its lowest since August 2020, reducing healthy churn and making it difficult for new job seekers to land a role. On top of that, immigration restrictions, high energy prices, and economic and geopolitical uncertainty have impacted business confidence and hiring plans.

“In the second half of 2025, in the shadow of tariffs, DOGE and other drivers of uncertainty, private sector job growth in the U.S. ground to a halt,” said Andrew Flowers, chief economist at Appcast. “But the story has shifted decidedly in a more optimistic direction.”

Flowers noted that through May, private sector payroll growth has averaged 87,000 new jobs. “Compare that to the prior six months when that average was a paltry 17,000,” said. “There is clear evidence that job growth has turned a corner, reaccelerating above the break-even rate to keep pace with population growth.”

The labor market is gaining traction, agreed Nicole Bachaud, labor economist at ZipRecruiter. “The data suggest that energy is returning to a labor market that had been largely stagnant, just in time for summer. Upward revisions to March and April reinforce that the rebound is becoming an established trend.”

The report appears against a low-hire, low-fire backdrop of muted expectations where job gains have been concentrated in just a few sectors, but layoffs have also been largely muted.

Ger Doyle, regional president, North America at ManpowerGroup, said that his company’s data shows that demand is becoming broader based, “with hiring activity showing up across sales, operations, finance, and service roles, while healthcare’s influence is beginning to moderate.”

He added that hiring is becoming more deliberate. “Employers are still posting roles, but they are taking more time to fill them, which is why the market can appear stable while feeling tighter in practice,” he said.

Doyle said that the next phase of employment growth will depend on whether the broader demand begins to translate more consistently into hires and creates more viable entry points for workers. “That would be the clearest sign that stability at the headline level is translating into broader opportunity rather than being confined to a limited group of roles,” he said. “At the same time, pressure on pay relative to rising costs is beginning to influence both hiring decisions and worker mobility, adding another layer to how the market evolves from here.”

The above-consensus jobs numbers are likely to further deter the Federal Reserve from lowering interest rates anytime soon. In fact, raising rates might be on the table.

“May’s jobs report complicates any Federal Reserve case for early rate cuts,” said Noah Yosif, chief economist at the American Staffing Association. “If inflation continues to outpace wages, the labor market’s ‘low-fire’ dynamic might not be enough to prevent losses in household costs,” he said.

“Taken with a broad perspective, the labor market is no longer the biggest source of worry in the economy,” Flowers said. “That would be inflation. The Fed are rightly going to focus on prices, not jobs, in the near future.”

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Industry Breakdown

The breadth of job gains improved in May, with multiple sectors seeing solid advances. Leisure and hospitality led all sectors with 70,000 jobs, well above the 14,000 per month average over the past year. Local government added 55,000, and healthcare employers reported 35,000 new jobs.

The retail, information, and finance sectors lost jobs in May. Air transportation employment declined by nearly 9,000 jobs, reflecting the collapse of budget carrier Spirit Airlines.

“Employers are continuing to hire for specialized white-collar jobs while remaining cautious about adding headcount in occupations that are especially sensitive to automation and interest rate uncertainty, such as financial services,” Yosif said.

Cutolo added that as new graduates enter the jobs market, “we anticipate the most in-demand skills for candidates will be AI and digital literacy, critical thinking and judgement, emotional intelligence and adaptability.”

He said that Adecco is also seeing growing interest in programs that help connect young workers with high-paying skilled trades careers.

Unemployment Holds

The unemployment rate was unchanged in May for the third straight month. High-profile companies have conducted large-scale layoffs, but those job losses haven’t pushed the unemployment rate meaningfully higher.

“Unemployment and labor force participation were essentially unchanged in May, a sign of stability, if not yet acceleration, in the broader workforce picture,” Bachaud said. “Underemployment also improved. Workers employed part-time for economic reasons fell by 137,000, and short-term unemployment of five weeks or less dropped by 286,000, both pointing to faster absorption of job seekers as new openings emerge.”

Many people looking for work remain anxious, however. The number of people considered long-term unemployed, or people without a job for 27 weeks or longer, rose by 155,000 to nearly 2 million, the highest since December 2021. “Workers who have been searching for months continue to face steeper headwinds and a more challenging job search than headlines suggest,” Bachaud said.

The composition of unemployment is also interesting, she added. “The share of unemployed workers who left their last job, a proxy for worker confidence, rose to its third-highest level in four years. Meanwhile, job losers declined, consistent with the low layoff levels reported. Workers are starting to move, and more of those moves appear to be voluntary.”

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Inflation Bites Wages

Higher inflation stemming from a jump in energy costs is having an impact on workers’ earnings. In May, year-over-year average hourly earnings rose 3.4%, cooling from a 3.6% gain in April, representing a continued squeeze on purchasing power.

“Rising energy prices threaten to raise the specter of inflation for American consumers once again,” said Daniel Zhao, chief economist at Glassdoor. He explained that consumer prices had risen year-over-year in April and that May data will likely show the second straight month of negative real wage growth.

“Wages aren’t keeping up,” Bachaud said. “Despite the uptick in market activity, workers have yet to translate that momentum into meaningful bargaining power. Perhaps more structurally concerning, wage growth is increasingly decoupling from productivity gains. As hiring picks up and output rises across the U.S. economy, workers are not seeing a proportional share of those gains reflected in their paychecks.”