U.S. Adds 172,000 Jobs in May; Unemployment Holds at 4.3%

U.S. employers added 172,000 jobs in May and the unemployment rate held at 4.3%, a stronger-than-expected showing that pointed to a labor market still on solid footing less than two weeks before the Federal Reserve’s next policy meeting.

The May gain in nonfarm payrolls, reported Friday by the U.S. Bureau of Labor Statistics, easily topped economists’ expectations of about 80,000 to 85,000. The report was stronger than the headline number alone suggested because the government also sharply revised the prior two months higher. March payroll growth was revised up by 29,000 to 214,000, and April was revised up by 64,000 to 179,000, adding a combined 93,000 jobs to the earlier estimates.

That combination reinforced a firmer picture of hiring in 2026 after unusually weak job growth in 2025. Reuters reported that the first five months of 2026 have averaged about 113,000 jobs per month, with May marking the latest in a run of better-than-expected readings.

Hiring in May was led by leisure and hospitality, which added 70,000 jobs, including 48,000 in food services and drinking places. Local government added 55,000 jobs, with 44,000 of those gains outside education. Health care employment rose by 35,000. Financial activities was a notable weak spot, losing 22,000 jobs.

Wage growth remained steady. Average hourly earnings for all private nonfarm employees rose 12 cents, or 0.3%, to $37.53 in May, up 3.4% from a year earlier. The average workweek for all private nonfarm employees was unchanged at 34.3 hours, while the labor force participation rate — the share of people working or looking for work — held at 61.8%.

The flat unemployment rate alongside solid payroll growth is not unusual because the two figures come from different Bureau of Labor Statistics surveys. In May, the jobless rate was unchanged at 4.3%, where it has remained in a narrow range of 4.3% to 4.5% since July 2025, according to the agency.

The report is one of the last major labor-market readings before the Fed’s June 16-17 meeting, which will be chaired by Kevin Warsh after his confirmation in mid-May and swearing-in later that month. The central bank sets interest rates to balance inflation and employment, making each monthly jobs report a closely watched input for policymakers.

Markets reacted quickly to the stronger data. Reuters reported that investors increased the odds of a later-year Fed rate hike after the report, while U.S. stock futures extended declines. Stephen Brown, deputy chief North America economist at Capital Economics, said in a note cited by Reuters that the third straight payroll gain above consensus should reduce officials’ concern about downside labor-market risks and make it harder for the Fed to look past elevated inflation.

For now, the May figures suggest the labor market has continued to cool only gradually rather than weaken sharply. With payroll gains beating expectations and prior months revised higher, the latest report offered fresh evidence that U.S. hiring has held up better than many economists anticipated heading into the Fed’s June meeting.