US economy blew past expectations to add 172,000 jobs in May

The US economy blew past Wall Street expectations to add 172,000 jobs in May in the latest sign of a rebound in the American labour market.

Friday’s figure from the Bureau of Labor Statistics far surpassed the 85,000 forecast by economists polled by Bloomberg. Hiring figures for March and April were revised up by a combined 93,000 to 214,000 and 179,000 respectively.

The gains were led by the leisure and hospitality sector, which added 70,000 jobs. Employment in local government and healthcare also rose sharply.

The unemployment rate was unchanged at 4.3 per cent.

Treasury yields and the dollar jumped following the news, as traders increased bets that the Federal Reserve may need to raise interest rates. The two-year Treasury yield, which moves with interest rate expectations, rose to 4.12 per cent, its highest level in two weeks.

Before the data release, traders had not expected a quarter-point rate increase until April next year, but following the report, they were fully pricing in a rate rise for January 2027.

After a sluggish performance last year in which just 10,000 posts were added on average each month, the jobs market has been jittery in the first half of 2026, fluctuating between large gains and losses.

The swings have made it difficult for economists to gauge the health of the world’s biggest economy, but there have been some positive signs in recent weeks.

Separate figures released this week showed that job openings surged to a two-year high in April, though economists warned against reading too much into the data.

US President Donald Trump’s war in the Middle East has further complicated the picture, with some Fed policymakers cautioning that the conflict could trigger a slowdown in US employment if it persists, as an oil shock ripples through the economy.

This is a developing story