Key facts
- The U.S. economy added 172,000 nonfarm payroll jobs in May, exceeding expectations.
- Private employers added 122,000 jobs in May, surpassing economists' forecasts.
- The unemployment rate remained steady at 4.3% in May.
- U.S. job openings increased to 7.618 million in April, the highest level since May 2024.
- Leisure and hospitality lost 11,000 jobs in May.
- The government sector lost 8,000 jobs in May.
- Healthcare lost 5,000 jobs in May.
- The tech sector announced 38,242 layoffs in May, the highest monthly total since August 2024.
- Artificial intelligence was cited as the reason for 40% of U.S. job cuts in May.
- Initial jobless claims rose to 225,000 for the week ended May 30, a four-month high.
- The number of Americans voluntarily quitting their jobs fell to its lowest level since the COVID-19 pandemic.
- Seattle City Council approved a yearlong moratorium on data center construction.
The U.S. labor market showed surprising resilience in May, with private employers adding 122,000 jobs, surpassing economists' forecasts of 117,000 and marking the largest gain since January 2025. Overall nonfarm payrolls increased by 172,000 jobs, also exceeding expectations. The unemployment rate remained stable at 4.3% for the second consecutive month. Job openings in April saw a significant increase, rising by 731,000 to 7.618 million, the highest level since May 2024, indicating a firming labor market. However, this broad strength was not uniform across all sectors. Leisure and hospitality lost 11,000 jobs, the government sector shed 8,000, and healthcare saw a decrease of 5,000 positions.
Amidst the overall positive job growth, the technology sector experienced a surge in layoffs, with 38,242 job cuts announced in May, the highest monthly total since August 2024. Artificial intelligence was cited as the primary reason for workforce reductions in 40% of U.S. job cuts in May, according to Challenger, Gray & Christmas, marking the highest monthly figure since the firm began tracking AI-related layoffs in 2023. Companies like Block, Cisco, and Atlassian have cited AI for layoffs, attributing them to efficiency improvements and restructuring for the 'agentic era.' This trend of companies reallocating budgets from employee raises and 401(k) matches to fund AI investments is also noted, with firms like Teradata and TTEC shifting funds.
Initial jobless claims rose to 225,000 for the week ended May 30, a four-month high, though the four-week moving average remains subdued, suggesting continued labor market stability. Worker productivity growth also slowed faster than initially thought. The number of Americans voluntarily quitting their jobs has fallen to its lowest level since the COVID-19 pandemic began. The May jobs report has intensified the debate at the Federal Reserve, with some analysts seeing inflation risks that could prompt a rate hike, while others point to labor market resilience as a reason for looser policy. Economist Stephanie Roth of Wolfe Research noted that inflation does not appear to be accelerating materially.
In other labor-related developments, a federal judge struck down several of former President Trump's immigration policies, which could potentially influence the labor market. Amazon engineers are questioning the company's $200 billion investment in AI data centers amidst 30,000 corporate layoffs, and Seattle City Council approved a moratorium on data center construction due to environmental concerns. Bank of America plans to hire approximately 4,000 summer interns and campus recruits, a number consistent with last year, and new hires will receive AI training. A study by Aon indicates that 74% of surveyed Asia-Pacific companies are integrating AI without widespread job cuts, often creating new AI-related roles. Meanwhile, humanoid robots face setbacks in Silicon Valley, and the trucking industry experienced a job decline in May, erasing April gains.