The U.S. economy added 172,000 jobs in May and the unemployment rate held steady at 4.3 percent, the Labor Department said Friday.
Economists had expected 85,000 jobs, with forecasts ranging from 55,000 to 110,000. The unemployment rate was forecast to be unchanged at 4.3 percent.
The April gain was revised up by 64,000 to 179,000 and March was revised up by 29,000 to 214,000, for a total of 93,000 additional jobs. Economists have been underestimating job growth for three consecutive months. The three-month average of job growth, a measure which smooths out monthly volatility and is considered by many to be a better guide to the health of the labor market, moved up to over 188,000.
The private sector added 120,000 jobs, far more than the 90,000 consensus forecast. The April estimate was revised up from 123,000 to 177,000.
Manufacturing payrolls jumped by 7,000, beating all estimates. The prior month’s initial estimate of a loss 2,000 was revised to unchanged. Durable goods employment expanded by 17,000, including 3,600 jobs in motor vehicles and parts manufacturing.
The federal government added 1,000 jobs in May after two consecutive months of shrinking payrolls. Compared with a year ago, federal government payrolls are down by 311,000, reflecting President Donald Trump’s efforts to reprivatize the U.S. economy. Compared with the peak of federal employment in October of 2024, payrolls are down by 346,000.
The labor market in the U.S. has experienced a significant shift away from dependence on an immigration-driven workforce. Jobs numbers that may seem anemic compared with recent years may actually indicate healthy—even robust—growth under current conditions, according to economists.
Many economists now estimate the so-called “break-even” rate of job growth—the rate required to keep unemployment from rising—may be as low as zero. By contrast, when immigration was at higher levels from 2021 through 2024, the economy needed to add more than 100,000 jobs per month to keep pace with labor force growth.
Retirements are also slowing labor force growth, as an increasing number of members of the large baby boom generation leave the workforce and, later, smaller generations fail to fully replace them.
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