US employers added 172,000 jobs in May while the country’s unemployment rate held steady at 4.3%, a sign of a resilient labor market despite rising inflation and economic uncertainty brought on by continued conflict in the Middle East.
Despite the positive update on the labor market, US stocks fell sharply by Friday afternoon after a big sell-off of AI chip stocks. The tech-heavy Nasdaq index closed 4% down, the largest single-day drop in over a year. The S&P 500 and and Dow were also down 2.6% and 1.3%, respectively.
Economists initially predicted there would be about 80,000 new jobs and a steady unemployment rate of 4.3%. Job figures for March and April were also revised up 29,000 and 64,000, respectively, a 93,000 boost compared with initial figures.
Job growth was seen in leisure and hospitality, which was boosted by 70,000 jobs in May, including 48,000 jobs in food services and drinking places. Employment in local government and healthcare also rose last month.
The new data from the Bureau of Labor Statistics is the latest in a number of reports that have pointed to strong hiring in recent months, despite a strained economy and an increase in inflation.
The labor department announced earlier this week that the number of job openings in April increased to 7.6m, while the number of people quitting, laid off and discharged changed little.
Private employers added 122,000 jobs in May, according to payroll firm ADP, which found that employers of all sizes and most industries – with the exception of the information and natural resource sectors – were hiring.
“Hiring was more broad-based in May than we’ve seen in the last few years,” Dr Nela Richardson, ADP’s chief economist, said in a statement. “The labor market continues to show sustained momentum going into the summer hiring season.”
Economists are predicting that the Fed will hold rates steady at its meeting 16-17 June, but Trump and his advisers have made it clear they expect Warsh to be receptive to their continued calls for rate cuts.
“We’ve got a Warsh Fed now,” the US treasury secretary, Scott Bessent, said at a news conference last week. “It’s a new day at the Fed … I had my first breakfast with Chair Warsh this morning, and I believe that he will do the right thing to balance inflation and growth.”
Economists say even if the chair supports a rate cut, it’s unlikely that a majority of the Fed’s 12 voting members would agree. At the Fed’s last meeting in April, just one member voted for lowering the target range for rates.
