May Jobs Report Seen Showing Continued Healthy Job Gains

Key Takeaways

• Friday’s May employment report is expected to show a third consecutive month of job growth, albeit at a slightly slower pace than in April, with unemployment flat.
• Economists expect healthcare to drive additions, along with broadening private sector job growth.
• Amid rising inflation and unemployment above 4%, analysts expect the Fed to continue holding rates at its June meeting, with the possibility of a future rate hike.

Economists forecast the May employment report to show a third consecutive month of six-figure job gains, which would follow a stronger-than-expected showing in April. They also predict that the economy added 105,000 new jobs last month, according to FactSet consensus estimates, while the unemployment rate likely remained at 4.3%.

In April, the US economy added 115,000 jobs, far above economists’ forecasts. That was driven in part by job growth in fields where AI adoption has been slower, such as education and healthcare. Economists believe this trend continued in May.

Overall, analysts say the new data is good news for the economy, with hiring remaining intact despite resurgent inflation driven by the Iran war. ”If we see modest job growth as expected in May, that would mean the malaise affecting the job market for the last year and a half is starting to lift, and that should help consumer sentiment recover if sustained in the next few months,” says William Adams, chief US economist at Fifth Third Commercial Bank. Amid crosswinds that include the Iran war, the artificial intelligence boom, and tax cuts, “the net effect of all of those factors is an economy that is continuing to grow at a decent clip, albeit unevenly,” he says.

Against this backdrop, the Federal Reserve is seen as holding interest rates steady at its mid-June meeting as it balances an unemployment rate above 4% with rising inflation.

May Jobs Report Forecast Highlights

• Job report release date and time: Friday, May 8, at 8:30 a.m. EDT
• Nonfarm payroll employment is forecast to increase by 105,000 in May vs. 115,000 in April, according to FactSet.
• The unemployment rate is forecast to remain at 4.3%.
• The average workweek is forecast to remain at 34.3.
• Hourly earnings are forecast to increase 0.4% month over month vs. 0.2% in April.

Job Growth Expected Across the Board

The overall tenor of the May jobs report should be one of a continued healthy labor market, economists say. With six-figure private sector job gains forecast near their April pace, JP Morgan analysts note that the three-month average job gain will rise above 100,000 for the first time since 2024, lifted by strong profit growth and rising capital expenditures.

For private industries overall, Fifth Third’s Adams expects “some broadening of job growth,” as they “have looked better since the turn of the year than they did in 2025.”

Economists expect the May jobs report to show a continuation of several recent trends, including hiring driven by education and healthcare. The group added 91,000 jobs in March and 46,000 in April. These sectors “should continue to lead job gains,” wrote Bank of America economist Shruti Mishra. “That said, we are likely to see some job growth broadening.” She thinks manufacturing hiring could show growth, along with gains in trade and transport. “Also, warm weather should support gains in leisure and hospitality and construction for a third consecutive month, with the latter also benefiting from ongoing data center demand.”

The Bank of America forecast calls for an overall increase in nonfarm payrolls of 95,000, with a 100,000-job increase in the private sector. However, “risks are skewed to the upside for our payroll forecast,” writes Mishra. “Claims remained low through May despite white-collar layoffs, suggesting limited labor market softening on an overall basis.”

Adams says the AI boom could lead to technology and temporary jobs edging higher in May, a sign that “employers are not yet realizing all of the productivity gains promised by AI, or that AI is creating demand for new types of jobs, in addition to allowing workers in existing jobs to do more with less.” While the energy industry likely sees higher fuel prices as short-lived, he’ll also watch the report for added jobs in mining.

On the other hand, the public sector has been struggling. April marked the seventh consecutive month of government job losses, and Goldman Sachs analysts say May will likely be the eighth. They forecast a 5,000-job loss here, reflecting a 10,000-job decline in federal payrolls, partially offset by a 5,000-job increase in state and local payrolls. Overall, Goldman Sachs forecasts a cooler nonfarm payroll figure than the consensus, with a gain of 60,000.

Inflation Will Likely Outpace Wage Growth

Average hourly earnings are expected to tick up to a 0.4% increase from 0.2% in April. However, Fifth Third’s Adams forecasts average hourly earnings to rise 0.2% on the month, which would result in their lowest year-over-year growth “since the current expansion took off.” He says the May CPI inflation report (releasing June 10) will likely show that wages failed to keep up with cost-of-living growth last month. “The job market has had a larger margin of slack over the last year and a half, and that is translating through to more modest growth of wages.”

Federal Reserve to Hold Rates Steady

With the May jobs report showing a healthy labor market against a backdrop of high inflation, futures traders agree nearly unanimously that the federal funds rate will remain in its current range of 3.50%-3.75% at the Fed’s June 17 meeting, according to the CME FedWatch tool. This would be the fifth consecutive meeting with unchanged policy.

“[An unemployment rate] of 4.3% or lower would likely leave the Fed comfortably on hold in the near term amid rising inflation risks,” writes Bank of America’s Mishra. “A strong jobs report would probably cause markets to price in more hikes, even though we think hikes are unlikely to materialize unless the [unemployment rate] is closer to 4%.”