May Jobs Report Comes In Hot, Keeps Fed Focused on Inflation
The May jobs report was released Friday morning and came in much higher than economists expected.
The May jobs report was released Friday morning, giving the Federal Reserve the latest update on the labor market ahead of its upcoming policy meeting slated for June 16-17.
The labor market is showing signs of resilience, with the U.S. adding 569,000 new jobs so far in 2026, or 113,800 per month on average.
This includes the 172,000 new jobs the U.S. added in May, as reported by the Bureau of Labor Statistics (BLS). This blew past economists' consensus estimates for the addition of 80,000.
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Leisure and hospitality saw the largest increase in job gains, adding 70,000 new positions, while local government was close behind with 55,000 new jobs. Healthcare (+35,000) and social services (+12,000) also saw notable job additions.
Financial services saw the biggest decline in jobs (-22,000), led by insurance companies and commercial banking.
Job gains for March (+29,000 to 214,000) and April (+64,000 to 179,000) were upwardly revised, too.
The unemployment rate, which is derived from a separate survey, remained unchanged at 4.3%, as expected.
The strong jobs reports "should dispel concerns at the Federal Reserve that the economy might be weakening," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger jobs outlook, adding that rate cuts are off the table for the time being.
The Federal Reserve's next meeting is less than two weeks away, with its latest policy decision due out at 2 pm Eastern Standard Time on Wednesday, June 17.
According to CME Group FedWatch, futures traders are widely expecting new Fed Chair Kevin Warsh and the rest of the Federal Open Market Committee (FOMC) to keep interest rates unchanged this time around.
ADP jobs report comes in higher than expected
Wall Street got a glimpse of how things are going in the labor market on Wednesday morning with ADP's National Employment Report, which showed private payrolls rose by 122,000 in May — more than economists expected and more than the 101,000 jobs added in April.
"Hiring was more broad-based in May than we've seen in the last few years," says Dr. Nela Richardson, chief economist at ADP. "The labor market continues to show sustained momentum going into the summer hiring season."
Growth was seen across businesses of all sizes, though companies with 49 employees or less added the most positions (+67,000). As for industries, education and health services (+57,000) saw the largest increase in jobs last month, while trade, transportation, and utilities (+36,000) and professional and business services (+11,000) also experienced strong gains.
With the May jobs report on the books, we looked at what economists, strategists and other experts on Wall Street expect the data to show and what the results could mean for the Fed and investors going forward. You'll find these outlooks, edited at times for brevity, below.
What Wall Street has to say about the May jobs report
"Payroll Blowout! 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." - Lindsay Rosner, Head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management
"Friday's jobs report was much stronger-than-expected and shows that the labor market is turning a corner after a rough past 12 months driven by fears of AI and uncertainty over geopolitics and tariffs. The revival of the labor market makes the Federal Reserve's job easier and allows it to keep rates steady in the meantime as it assesses the volatile inflation situation." - Glen Smith, Chief Investment Officer at GDS Wealth Management
"Today's numbers are consistent with other positive recent labor market indicators as well, such as better-than-expected job openings and declining layoffs. Employers appear to be looking past economic and financial uncertainties brought about by the ongoing conflict in the Middle East." - Jerry Tempelman, Former Senior Analyst at the NY Fed and VP of Economic and Fixed Income Research at Mutual of America Capital Management
"Today's upside surprise underscores ongoing economic resilience, but it will also likely keep the Fed — and the markets — focused on inflation pressures." - Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management
"The labor market has strengthened and importantly broadened from its weak and narrow state in 2025, where non-cycle healthcare and the social assistance segment of the U.S. economy was responsible for all the job growth and more. The good news for the consumer is that the labor market is strong and Americans are employed. The concerning news for future spending is that real wages are negative as average hourly earnings have risen 3.4% YOY vs current inflation which is running at 3.8%. The Fed is likely to attempt to wait and see, but their focus is likely to shift to the inflation side of the mandate." - Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company
"It's going to be a tough start for Kevin Warsh. With the inflation and employment data where they are now the debate is quickly moving on from 'when will the Fed be able to cut' to 'why isn't the Fed hiking?!'. If the Fed moves from a dovish bias to a hawkish bias that will be a difficult transition for the markets to digest, and would likely trigger a renewed bout of volatility across asset classes." - Stephen Coltman, Head of Macro at 21shares
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