The U.S. economy added jobs at a modest pace in May amid uncertainty surrounding the impact of conflict in the Middle East on the labor market.
The Bureau of Labor Statistics on Friday reported that employers added 172,000 jobs in May. That figure is above the estimates of economists polled by LSEG, who predicted a gain of 85,000 jobs.
The unemployment rate held steady at 4.3%, which was in line with the expectations of LSEG economists.
Revisions were made to the payroll numbers for the prior two months, with March revised up by 29,000 from a gain of 185,000 to a gain of 214,000; while April’s report was revised up by 64,000 from a gain of 115,000 to 179,000.
Taken together, employment in March and April was 93,000 jobs higher than previously reported.
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Private payrolls added 120,000 jobs in May, well above the LSEG poll’s prediction of 85,000 jobs. April’s gain of 123,000 jobs was revised up to 177,000 jobs, while March’s gain of 190,000 jobs was revised up to 202,000.
Government payrolls grew by 52,000 jobs in May. Local government accounted for most of the gain, adding 55,000 jobs for the month compared with 1,000 jobs added by the federal government. Those gains were partially offset by a decline of 4,000 jobs in state government.
The manufacturing sector added 7,000 jobs in May, topping the gain of 2,000 jobs expected by LSEG economists.
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Healthcare added 35,200 jobs in May, roughly in line with the average monthly gain of 38,000 jobs over the past 12 months. Most of those gains occurred in ambulatory healthcare services (+25,700) and in hospitals (+6,000).
Social assistance added 12,000 jobs in May, mainly in individual and family services (+9,600). The sector has added an average of 17,000 jobs per month over the last year.
The financial activities sector shed 22,000 jobs in May and the sector is down by 107,000 jobs from a recent peak in May 2025. Most of the job losses occurred at insurance carriers (-10,700) and commercial banking (-2,600).
The number of long-term unemployed, defined as those who have been jobless for 27 weeks or more, was little changed over the month at 2 million but is up 524,000 over this year. The long-term unemployed accounted for 27.5% of all unemployed people in May.
The number of people employed part-time for economic reasons was little changed at 4.8 million people in May. These individuals would’ve preferred full-time employment but worked part-time because their hours had been reduced, or they weren’t able to find full-time jobs.
The labor force participation rate held steady at 61.8% in May, while the employment-population ratio was little changed at 59.2%. Both measures were little changed over the last year after accounting for population control adjustments.
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Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, called the May jobs report a “Payroll Blowout!” and added, “We’ve gained more and more confidence in the last prints that the Fed doesn’t have to be worried about the labor market. Laser focused on inflation and it will all come down to the duration of this war to determine the Fed’s next move. For now, the move is to not move: HOLD.”
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Seema Shah, chief global strategist at Principal Asset Management, said that the jobs report “reinforces that there is little basis for an easing bias from the Fed.”
“Job creation above 150,000 – very comfortably exceeding the Fed’s estimate of breakeven and also broad-based in nature – comes alongside inflation that remains above target and is expected to trend higher in coming months. In effect, both sides of the Fed’s dual mandate argue against cuts at this stage,” Shah added.
