Weekly Economic Trends and Indicators
The Headlines:
On Friday, the Bureau of Labor Statistics (BLS) reported that U.S. nonfarm payroll employment increased by 172,000 in May. This was more than double the market’s expectations. Revisions to previous months were also positive. March’s figure was revised upward from +185,000 to +214,000. April was revised from +115,000 to +179,000.
The U.S. unemployment rate was unchanged from April at 4.3%. The number of people in the labor force, and the number employed and unemployed were little changed. The duration of unemployment continued to trend upward. The percentage of unemployed workers who have been unemployed for 27 weeks or more increased from 25.3% in April to 27.5% in May (up from 20.4% in May 2025).
The Details:
Job gains were concentrated into relatively few sectors. Among the top categories were health care (+35,200), leisure and hospitality (+70,000), and local government (+43,500). Total goodsproducing employment increased by 28,000. Employment in financial activities decreased by 22,000. All other major categories increased or decreased by less than 20,000.
The Context:
The headline number from this report was tremendously positive, especially when factoring in the revisions for March and April. With those revisions, we now have more than 170,000 net new jobs in each of the last three months. Contrast that with the period from May 2025 through February 2026 where net new jobs were negative (-49,000), and the conversation revolved around whether changes in population growth and immigration were causing permanent changes in labor supply.
Those conversations may seem premature in light of the new data. However, the lack of breadth in the job gains is still worth examining. Health care jobs have been increasing at a faster rate than other sectors for many months now, and are predicted to continue to outperform. That part could have been predicted. Local government is still gaining back jobs lost during the COVID recession, so that is also not a surprise. The increase in leisure and hospitality jobs, however, is a surprise. Part of it could be hiring in advance of the World Cup soccer tournament matches being held in several major cities. We may may know more about that when county-level data is released next month.
Lack of breadth in job growth notwithstanding, this was a positive report. The next question is whether good news is really good news, or whether good news for jobs is bad news for interest rates. That will be the big question for the Federal Reserve when they meet this month. We will take up that question next week as we look at the mid-year review of the economic outlook.
Next week: Mid-year review
