May 2026 Employment Report

The U.S. economy added 172,000 jobs in May, according to the Bureau of Labor Statistics (BLS) survey of employers. The increase was nearly double the consensus expectation. The prior two months were revised up by a cumulative 93,000. Employment “gains occurred in leisure and hospitality, local government, and health care. Employment in financial services declined”, according to BLS. Monthly employment growth averaged 108,000 over the first five months of the year, much stronger than the pace of job gains in 2025.

The BLS’s survey of households reported the unemployment rate at 4.3% in May, unchanged from April. The unemployment rate has fluctuated between 4.0% and 4.5% since June 2024. Average hourly earnings – a proxy for wage growth – rose 0.3% for the month and 3.4% vs. a year ago.

Bottom line

The U.S. job market has posted three strong monthly gains in a row. Investors reacted to the report by fully pricing in a 25-basis point rise in the Fed Funds rate before yearend. Bond yields surged in the immediate aftermath of the data release, while equity futures had a more muted reaction. Next week’s CPI report will add further context to the state of the economy in advance of the FOMC’s June 17^th meeting.

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