US job growth surges in May, bolstering Fed rate‑hold outlook

The U.S. Labor Department reported that non‑farm payrolls rose by 172,000 jobs in May, more than double the Bloomberg consensus forecast of 85,000. It marks the third consecutive month of payroll gains exceeding 100,000. Unemployment held steady at 4.3% and the labor‑force participation rate stayed at 61.8%.

Private‑sector hiring added 120,000 jobs, led by leisure and hospitality, local government and health care, while the public sector contributed another 52,000 positions. Revisions to earlier months boosted total employment by a further 93,000 jobs for March and April. Average hourly earnings rose 0.3% month‑over‑month, up 3.4% year‑over‑year.

The strong payroll report narrows the Federal Reserve’s room for monetary easing. With the Fed’s policy rate unchanged at 3.50‑3.75% since late 2025, markets now price a 97% chance that rates will remain steady at the June 16‑17 meeting, and a modest probability of a 25‑basis‑point hike. Inflation remains above the 2% target at around 3.8%.

Wall Street reacted negatively, as the S&P 500 fell and semiconductor stocks led broader declines. The robust jobs data, combined with fiscal stimulus measures that have helped buffer the economy from Middle‑East conflict‑driven inflation, suggests continued resilience in the U.S. labor market.