U.S. hiring remains resilient as NFP logs second straight month of robust job growth

US nonfarm payrolls increased by 172,000 jobs in May after rising by 179,000 in April (which was upwardly revised from 115K), doubling the forecast for a payrolls increase of 85,000 jobs.

The upbeat May numbers mark the second consecutive month of strong employment gains, adding to signals that the US labor sector continues to strengthen after facing difficulties over the past year.

The unemployment rate remained at 4.3% for a third straight month, while average earnings fell from 3.6% in April to 3.4% last month, matching expectations and easing concerns over inflationary pressures.

Another round of solid labor data in May was mainly driven by low layoffs, as fiscal stimulus has boosted corporate profits and allowed businesses to refrain from large-scale firings. However, persisting uncertainty—stemming first from President Donald Trump’s import tariffs last year and more recently from the US-Israeli war with Iran—has kept businesses cautious about boosting hiring.

Economists expect the labor market to remain in a slow-hire, slow-fire mode for some time despite the recent better-than-expected numbers, as the overall situation remains fragile with the full negative impact of the war in the Middle East still to be seen.