May's blowout report shows a boom-like new jobs pace
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Doomers be damned: America is in the midst of a hiring reacceleration that few saw coming.
Why it matters: It is a rapid turnaround from the slump of 2025's gloomy jobs growth. Employers are coming off the sidelines, with reinvigorated demand for new staff, despite the risks of economic uncertainty from the Iran war, AI, tariffs and more.
What they're saying: "It's the kind of headline result that looks like a serious plot twist after months of lackluster reports," Indeed's Laura Ullrich wrote in a note Friday morning.
- "Storm clouds from political uncertainty and rising energy prices still loom large on the horizon, but for the time being, employers are continuing to expand payrolls," Daniel Zhao, chief economist at Glassdoor, wrote in a note.
Driving the news: The U.S. economy added 172,000 jobs in May, more than double the 80,000 jobs economists anticipated.
- Upward revisions alone raised employment over the previous two months by a cumulative 93,000.
- With those revisions, the economy has added an average of 188,000 jobs over the past three months, a period that captured the turbulent geopolitical backdrop of the Iran war.
- That is a boom-like pace relative to the deeply negative three-month average as recently as six months ago.
Another way to think about the hiring jump: The economy has averaged gains of 114,000 jobs per month so far this year, a far cry from the 10,000 monthly average added in 2025.
Between the lines: The unemployment rate held at 4.3% for the third straight month. (It actually edged down some, on an unrounded basis — to 4.296% from 4.337% in April.)
- The share of prime-age workers — ages 25-54 — with a job rose to 80.8%, just a tick below the post-pandemic-era high.
Yes, but: Effects from the Iran war are apparent in negative real wage growth, keeping pressure on household budgets despite the renewed strength in hiring.
- Average hourly earnings, a barometer of wage growth, rose 3.4% in the year ending in May. But that almost certainly lags the rate of inflation over the same period, which is expected to have risen 3.8% in next week's Consumer Price Index report.
Threat level: White-collar hiring has flatlined — and in some cases, contracted — in recent months, possibly reflecting AI-related factors that are making employers more hesitant to hire.
- That was evident in the traditional office worker sectors, including financial activities, information and professional and business industries.
- That pattern "is consistent with ongoing restructuring, including the displacement effects of automation and artificial intelligence," Jason Pride, chief investment strategist at Glenmede, wrote in a note.
The bottom line: The labor market is heading into the summer with hot hiring momentum.
