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The U.S. economy generated 172,000 non-farm jobs in May 2026, far exceeding market expectations, which anticipated only 85,000 job additions, according to the monthly employment report released by the Bureau of Labor Statistics on Friday.
The data confirms the resilience of the U.S. labor market despite the economic impact of the armed conflict between the U.S., Israel, and Iran, the direct phase of which began on February 28, 2026, and has raised inflation to 3.8% year-on-year in April.
However, the unemployment rate remained unchanged at 4.3%, a level that has stayed within a narrow range of between 4.3% and 4.5% since July 2025, with a total of 7.3 million unemployed individuals.
The leisure and hospitality sector led job creation with 70,000 new positions, well above the monthly average of 14,000 recorded over the past 12 months, largely driven by restaurants and bars, which added 48,000 jobs.
The local government added 55,000 positions, primarily in non-educational areas, while the healthcare sector brought on 35,000 workers, in line with its usual monthly average.
In contrast, financial activities lost 22,000 jobs in May and have accumulated a decline of 107,000 positions since their peak in May 2025.
Air transport also recorded losses of 9,000 jobs, partly due to the closure of a company in the sector.
Average hourly wages increased by 12 cents, or 0.3%, to $37.53, with a year-over-year increase of 3.4%, while the average workweek remained at 34.3 hours.
The report also revised the data for previous months upwards: March increased from 185,000 to 214,000 jobs and April from 115,000 to 179,000, which adds up to 93,000 additional jobs to the previous records.
The war with Iran has driven up the price of gasoline from approximately $2.98 per gallon before the conflict to as high as $4.55, putting pressure on the cost of living for Americans and complicating the situation for the Federal Reserve.
Some projections estimate that the conflict could subtract 0.3 percentage points from GDP growth in 2026, bringing it down to 1.8%, while Goldman Sachs projected that unemployment could reach 4.6% by the end of the year with a 30% probability of recession.
Wall Street's reaction to the report was negative: the yield on the 10-year Treasury bond jumped to 4.54%, and stocks fell at the start of the session, as investors interpreted the strength of employment as a signal that the Federal Reserve will keep interest rates high without cuts in the short term.
The next employment report, corresponding to June 2026, is scheduled for Thursday, July 2.
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