US payrolls rise 172,000 in May, jobless rate holds at 4.3%

2026-06-05

According to the May employment report released by the US Labor Department, nonfarm payrolls rose by 172,000 from the previous month. The increase far exceeded market expectations of around 80,000 to 110,000, while the unemployment rate was unchanged from the previous month at 4.3%.

Hiring remains resilient

The increase in payrolls for March was revised up from 185,000 to 214,000, and April was revised up from 115,000 to 179,000. That marked the third straight month of payroll gains.

In May, the leisure sector, including restaurants, led the overall increase with 70,000 jobs, while health care added 35,000. Industries supported by steady demand for jobs amid aging demographics provided a floor.

Wage growth slows

Average hourly earnings rose 3.4% from a year earlier, matching market expectations. The pace slowed from 3.6% in April. As companies face uncertainty about the outlook, they may be increasingly holding down direct hiring and filling needed positions with temporary workers and others.

The unemployment rate was unchanged at 4.3% from April, but the main factor was a decline in the number of people looking for work amid tighter immigration enforcement by the Trump administration. The labor force participation rate was flat at 61.8%.

Household pressure continues

While the labor market remains firm, household burdens are increasing as higher gasoline prices tied to the military conflict between the US and Iran weigh on consumers. The savings rate in April was 2.6%, down 0.6 percentage point from March. That is nearly half the 5.2% average for 2000-19, before the COVID-19 pandemic.

The Trump administration implemented tax cuts this spring to boost refunds received by taxpayers in the current filing season, but the effect is fading. Moody's economist Mark Zandi said extra spending on higher fuel prices stemming from the military conflict has already exceeded the cumulative refund amount.

According to the American Automobile Association, the average price of regular gasoline is in the $4.20s per gallon. Although it has eased slightly from a peak in the $4.50s on hopes of a ceasefire, it has still not fallen below $4, a level consumers tend to view as expensive. The outlook for personal consumption is difficult to gauge, and the Federal Reserve is likely to face a series of tough policy decisions.

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