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FILE – A job seeker waits to talk to a recruiter at a job fair Aug. 28, 2025, in Sunrise, Fla.<\/p>\n
Marta Lavandier \/ AP<\/p>\n
The American job market continues to show surprising strength, shrugging off the high costs of the Iran war<\/a>.<\/p>\n Employers added 172,000 jobs in May \u2014 roughly double what forecasters had expected \u2014 and the unemployment rate remained at a low 4.3%.<\/p>\n The Labor Department reported Friday that job growth was down slightly last month from a revised 179,000 in April. The unemployment rate stayed at a low 4.3%<\/p>\n Hiring has bounced back this year from a miserable 2025, showing resilience in the face of economic uncertainty and painfully high energy prices<\/a> caused by the Iran war<\/a>.<\/p>\n The job gains last month were broad-based. Local governments added 55,000 workers, restaurants and bars 48,000, healthcare companies 35,000. <\/p>\n In another sign of job market strength, Labor Department revisions added a combined 93,000 jobs in March and April. Job growth averaged 188,000 a month from March through May, marking the best three months of hiring since early 2024.<\/p>\n \u201cThe hiring recession is over. American firms are hiring again,\u2019\u2019 said Heather Long, chief economist at Navy Federal Credit Union. \u201dThe job rebound is happening in almost every industry … This is encouraging news for job seekers and for the U.S. economy. The labor market has stabilized and is showing early signs of a genuine rebound.\u2019\u2019<\/p>\n With just five months to go before consequential midterm elections in the U.S., Americans have grown increasingly frustrated by rising costs and it\u2019s unclear if the strong job numbers this year will drown that out. <\/p>\n Inflation data<\/a> last week showed that in addition to gasoline, prices for groceries, clothing and electricity are also on the rise, indicating that inflation may be growing more entrenched.<\/p>\n Polls show that President Donald Trump\u2019s approval rating on the economy is falling sharply<\/a> after being reelected largely on the promise of taming inflation. <\/p>\n And despite the pickup in hiring, wage gains were modest. Average hourly wages rose 0.3% from April and 3.4% from May 2025, consistent with the Federal Reserve\u2019s 2% inflation target.<\/p>\n Workers, jobseekers and employers have been stuck in an awkward \u201cno-hire, no-fire\u2019\u2019 labor market. \u201cThose who have jobs are clinging to them, while those without are left wanting,\u201d Diane Swonk, chief economist at the tax and consulting firm KPMG, wrote in a commentary ahead of the jobs report. \u201cThe result is a sense of being frozen or left in a sort of labor market purgatory.\u2019\u2019<\/p>\n Many young people are finding it tough to break into a stagnant job market. And workers who have been laid off struggle to get back to work. Nearly 28% of the unemployed in April had been jobless for more than six months, biggest share since December 2021.<\/p>\n Seeing their prospects diminished, Americans are reluctant to leave their jobs and seek something better elsewhere. In April, the number of people who quit dropped to the lowest level<\/a> since the frightening days of August 2020, when the COVID-19 was running rampant.<\/p>\n Last year, employers added 9,700 jobs a month, fewest outside a recession since 2002. <\/p>\n This year, hiring has rebounded, averaging 114,000 new jobs a month from January through May. Big tax refunds \u2014 the product of President Donald Trump\u2019s 2025 tax cuts \u2014 have given the economy a lift, offsetting the impact of higher energy prices since the United States and Israel attacked Iran in late February. But the refunds have mostly been pocketed, and gasoline prices remain above $4 per gallon.<\/p>\n Healthcare companies have been driving much of hiring over the past year.<\/p>\n Martha Gimbel and Ryan Nunn of Yale University\u2019s Budget Lab note that strong healthcare hiring isn\u2019t surprising as Americans age and need more prescriptions and trips to the doctor. In fact, the industry\u2019s job growth is in line with Labor Department predictions from a decade ago. \u201cThe question is not why healthcare has kept hiring\u2014it is why other industries have not,\u2019\u2019 they wrote in a report published Tuesday, suggesting that one explanation might be an immigration crackdown<\/a> that has reduced the supply of foreign-born workers.<\/p>\n At least the United States doesn\u2019t need as many new jobs as it used to. The drop in immigrants and rising Baby Boomer retirements mean that fewer people are competing for work. As a result, the so-called break-even point \u2014 the number of new jobs required to keep the unemployment rate stable \u2014 has likely dropped to near zero, from the 155,000 new jobs per month that was typical two or three years ago, according to a Federal Reserve report.<\/a><\/p>\n Some analysts fear that artificial intelligence will wipe out entry-level jobs. But economists Gregory Daco and Lydia Boussour of the tax and consulting firm EY-Parthenon wrote in a commentary Tuesday that AI \u201cadoption is proving more gradual and costly than many anticipated. Firms are increasingly using AI to enhance productivity and control labor costs.\u2019\u2019 But AI, they wrote, has reduced hiring rather than \u201dtriggering broad-based layoffs.\u2033 <\/p>\n