May Jobs - Healthy Report Could Mean Hikes Ahead

Healthy job gains; unemployment steady.  In May, U.S. job growth topped all forecasts and the unemployment rate held steady offering a clear indication that the labor market may be firming up after near-zero job growth in 2025.  Overall, today’s report will likely put more pressure on Fed policymakers to consider interest rate increases as necessary to contain inflation.

• Payrolls grow 172K in May.  The U.S. labor market added 172k jobs in May nearly doubling expectations for 88K and building on a combined 393K jobs added in March and April.  Over the last three months, employers added 565K jobs compared to total forecasts of +218K.   The leisure and hospitality sector added 70K jobs in May, well above the average monthly gain of 14K over the last 12 months.  Local government added 55K and health care added 35K.  Other sectors were positive or neutral overall.
• 4.3% unemployment in May, unchanged for a third month.  The U.S. unemployment rate registered 4.3% in May, in line with April and consistent with expectations for the same.  At 61.8%, the labor force participation rate was unchanged month over month.