Hiring blows past expectations, accelerating in May despite Iran war
Hiring blew past expectations in May, registering at a blockbuster clip despite a continued rise in inflation set off by the Iran War.
The U.S. added 172,000 jobs in May, according to the report, which marked an acceleration from 115,000 jobs added in April. The reading for April exceeded economists' expectations. The reading amounted to a slight downshift from March, when the U.S. economy gained 185,000 jobs.
Still, the job gains in May indicated a robust expansion of the labor market, defying concern about a potential economic downturn. Hiring has proven unexpectedly resilient in recent months, despite a rise in costs borne by businesses and shoppers.
The unemployment rate held steady at 4.3% in May, the Bureau of Labor Statistics (BLS) said. Unemployment remains low by historical standards.
The leisure and hospitality sector added 70,000 jobs in May, far exceeding an average of 14,000 jobs added each month over the past year. Job gains also came in local government and healthcare.
The Middle East conflict, which began on Feb. 28, prompted the Iranian closure of the Strait of Hormuz, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff triggered one of the largest oil shocks ever recorded.
The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.
The price of an average gallon of gas stood at $4.24 as of Thursday, AAA data showed – an increase of $1.26 per gallon since the war began on Feb. 28. That amounts to a roughly 42% price jump in about three months.
Grocery prices have also climbed as a result of higher diesel costs borne by suppliers.
A persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation. The choice to raise interest rates could slow price increases, but it risks a cooldown in economic performance.
For now, the U.S. economy appears robust. The economy grew at a solid pace over the first three months of 2026, rebounding from sluggish performance at the end of last year.
Futures markets overwhelmingly expect the Fed to hold interest rates steady when policymakers meet next month, according to the CME FedWatch Tool, a measure of investor sentiment.
