US May payrolls add 172,000 jobs, unemployment holds at 4.3%

The U.S. Labor Department reported that non‑farm payrolls rose by 172,000 in May, nearly double the 85,000‑88,000 jobs economists had forecast. The unemployment rate stayed at 4.3% for a third straight month. Revised data added 93,000 jobs for March and April, raising the average monthly gain to about 114,000 this year. Hiring was led by leisure and hospitality (+70,000), local government (+55,000) and health‑care (+35,000). Wage growth was modest, with average hourly earnings up 0.3% from April and 3.4% year‑over‑year, lagging inflation that ran near 3.8% in April amid higher oil prices linked to the Iran conflict.

Financial markets reacted sharply: the S&P 500 fell about 2.6%, the Nasdaq dropped over 4% – its worst day in a year – and the 10‑year Treasury yield rose above 4.5%. The stronger‑than‑expected jobs data boosted expectations that the Federal Reserve will keep rates steady for now but may raise them later in the year, with market odds of a 25‑basis‑point hike by year‑end climbing to roughly two‑thirds. Analysts noted the data gives the Fed more flexibility to focus on inflation, while also highlighting the mixed picture of solid hiring alongside modest wage gains and persistent price pressures.