The United States labour market delivered another stronger-than-expected performance in May, with employers adding significantly more jobs than forecast and unemployment remaining steady, further diminishing expectations for near-term interest rate cuts from the Federal Reserve.
According to data released on Friday by the Bureau of Labor Statistics (BLS), nonfarm payrolls increased by 172,000 in May, comfortably exceeding expectations for an 85,000 gain. The result followed an upwardly revised increase of 179,000 jobs in April.
The unemployment rate held at 4.3%, matching market expectations and signalling continued resilience in the labour market despite concerns about slowing economic growth and the impact of higher borrowing costs.
Job gains were broad-based across several sectors during the month. The leisure and hospitality sector led hiring, adding 70,000 positions. The increase was well above the sector's average monthly gain of 14,000 over the past year.
Local government employment rose by 55,000 positions, while the health care sector, one of the most consistent sources of employment growth over the past year, added 35,000 jobs. Social assistance employment increased by 12,000.
Wage growth remained stable, with average hourly earnings rising 0.3% during the month and 3.4% from a year earlier, both in line with economists' forecasts.
The report arrived against a backdrop of relatively subdued expectations, as employers have generally maintained staffing levels in a labour market characterised by limited hiring and limited layoffs.
While employment growth has remained concentrated in a handful of sectors, redundancies have also remained modest, although concerns have emerged that advances in artificial intelligence may increasingly influence workforce decisions.
The latest figures were further strengthened by upward revisions to previous months' data. April payroll growth was revised higher by 64,000 jobs to 179,000, while March employment gains were revised up by 29,000 to 214,000.
The BLS has been under heightened scrutiny since President Donald Trump dismissed the agency's commissioner last year following a series of weaker-than-expected employment reports and substantial downward revisions.
William J. Wiatrowski currently serves as acting commissioner.
The household survey, which is used to calculate the unemployment rate, also pointed to continued labour market strength. The number of employed Americans increased by 149,000 during the month.
Meanwhile, the labour force participation rate remained unchanged at 61.8%. A broader measure of unemployment, which includes discouraged workers and individuals employed part-time for economic reasons, edged down to 8.1%.
The stronger-than-expected payroll figures are likely to reinforce the Federal Reserve's cautious approach to monetary policy. Policymakers have increasingly shifted their focus towards inflation risks, with recent comments from central bank officials suggesting growing confidence in labour market conditions.
The Federal Reserve has largely remained on hold throughout 2026 after lowering benchmark interest rates by a cumulative 0.75 percentage points during the latter part of 2025.
Officials have consistently indicated they are prepared to wait for additional economic data before committing to further policy adjustments.
Beyond the labour market, broader economic indicators continue to suggest the U.S. economy remains on solid footing.
Gross domestic product expanded at an annualised rate of 1.6% during the first quarter, while the Federal Reserve Bank of Atlanta's GDPNow model is currently tracking growth of around 3% for the second quarter.
