U.S. Employers Add 172,000 Jobs in May, but Long-Term Unemployment and Worker Pessimism Remain Elevated

U.S. employers added 172,000 jobs in May, exceeding analyst forecasts and extending the pace of gains recorded in March and April. Average monthly job growth from March through May reached nearly 190,000, triple the roughly 63,000 average recorded a year earlier.

The labor market had weakened toward the end of 2025 and into early 2026, when employers cut an average of 4,300 jobs per month from December through February. Recent strength follows that period of contraction. Corporate earnings growth reached about 28 percent in the first quarter, and 85 percent of S&P 500 companies beat analysts’ expectations—the highest share in nearly five years, according to FactSet.

Earnings growth over the past two years has averaged 11 percent, and analysts project 22 percent growth for the second quarter. The Republicans’ One Big Beautiful Bill lowered corporate taxes and provided additional breaks that analysts said helped support profitability. Health care added 610,000 jobs over the past 12 months, the largest sectoral gain, while leisure and hospitality added 240,000.

Laura Ullrich, director of economic research at Indeed, said the health care increase reflects demand from an aging population as the oldest baby boomers approach 80. Leisure and hospitality companies added 70,000 jobs in May ahead of summer travel and the 2026 World Cup, which begins in June.

Local government added 55,000 jobs in May, partly tied to seasonal park and public-works staffing, said Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth.

He described the hiring in leisure, hospitality, and government as a positive sign for broader economic activity. Seven sectors posted year-over-year employment gains and seven recorded losses, according to Indeed. Government employment fell 174,000 and financial services fell 107,000 over the past year.