US adds 172,000 jobs in May, strongly beating expectations

US jobs report beats expectations, unemployment steady at 4.3%

The US economy added 172,000 jobs in May, comfortably beating economist forecasts, while the unemployment rate held steady at 4.3%. The Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 172,000 in May, with the unemployment rate unchanged.

Economists had expected a smaller increase. The Guardian reported that economists initially predicted about 80,000 new jobs, while the South China Morning Post noted that economists polled by Dow Jones Newswires and the Wall Street Journal had expected job growth of 80,000. BBC reported that economists had expected a 105,000 increase, less than the 172,000 seen.

The strong hiring figures were accompanied by upward revisions for the prior two months. Both The Guardian and the South China Morning Post reported that job figures for March and April were revised up by a combined 93,000. BBC specified that the revisions were 29,000 and 64,000 respectively, a 93,000 boost compared to initial figures.

Sector highlights: hospitality, government, and healthcare lead

Job gains were concentrated in several key sectors. According to BBC, leisure and hospitality businesses created 70,000 jobs in May, a jump from the average monthly increase of 14,000 for the prior year. Food and drink firms specifically were responsible for 48,000 of those jobs. BBC attributed this hiring surge to preparations for the World Cup, which is being jointly hosted by the US, Mexico, and Canada this summer.

Local government employment rose by 55,000 jobs across the month, and the healthcare sector created 35,000 jobs, BBC reported. Gains were also seen in social work as well as mining, quarrying, and oil and gas extraction.

In contrast, the financial sector saw declines. BBC reported a 22,000 fall in financial services jobs, which have fallen by 105,000 overall from a peak last May.

Broader labor market indicators

Beyond the headline jobs figure, other data points to continued labor market strength. The Guardian reported that the Labor Department announced earlier this week that the number of job openings in April increased to 7.6 million, while the number of people quitting, laid off, and discharged changed little.

Private employers added 122,000 jobs in May, according to payroll firm ADP. The Guardian quoted Dr. Nela Richardson, ADP's chief economist, as saying: "Hiring was more broad-based in May than we've seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season." ADP found that employers of all sizes and most industries—with the exception of the information and natural resource sectors—were hiring.

The South China Morning Post characterized May's data as the third straight month of increases, suggesting the labor market may be exiting a recent period of turbulence. The Post noted that job growth in the US has see-sawed between expansion and contraction month to month over the last year, but May's data marks a continuation of recent gains.

Economic context and Federal Reserve policy

The jobs report comes amid rising inflation and ongoing conflict in the Middle East. The Guardian noted that the US economy has shown resilience despite increased inflation and economic uncertainty. BBC attributed rising business costs to the US-Israel war with Iran.

The report is the first monthly jobs data released under the Federal Reserve's new chair, Kevin Warsh, who was appointed by President Trump in January and sworn in last month, according to The Guardian. The Guardian reported that economists are predicting the Fed will hold rates steady at its meeting June 16-17, but Trump and his advisers have made it clear they expect Warsh to be receptive to their continued calls for rate cuts.

Treasury Secretary Scott Bessent said at a news conference last week: "We've got a Warsh Fed now," as quoted by The Guardian. The Guardian noted that the Fed typically cuts rates in response to a weak labor market, which can boost the economy but also raise prices. Raising interest rates would cool spending and inflation, but risks higher unemployment. The publication highlighted that only one Fed member voted for lowering the target range for rates at the April meeting, indicating a cautious approach among policymakers.

World Cup ticket prices and hospitality concerns

BBC also reported on concerns about World Cup affordability. Hotels have warned of slow bookings, while fans have complained at being priced out of the tournament. US President Donald Trump declared he "wouldn't pay it either" when asked about a $1,000 ticket price to watch his country play Paraguay in June. BBC noted that Fifa declined to comment on an investigation at the time.

Despite these concerns, the hospitality sector's robust hiring ahead of the tournament contributed significantly to the overall jobs growth.