US Job Growth Beats Forecasts, Complicating Fed Rate-Cut Path

The US economy added 172,000 jobs in May, well above market expectations of 85,000, according to Labor Department data released Friday. The unemployment rate held steady at 4.3 percent, matching economist forecasts. Average hourly earnings rose 0.3 percent month-on-month and 3.4 percent year-on-year, the data showed. The employment figures suggest the labor market remains resilient despite ongoing inflation pressures that keep price growth above the Federal Reserve's 2 percent target. The Fed's preferred inflation gauge, the Personal Consumption Expenditures index, climbed to 3.8 percent annually in April, the report noted. Consumer confidence, as measured by the University of Michigan survey, fell to 44.8 points in May. The combination of solid job growth and elevated inflation reduces the likelihood of near-term interest rate cuts, analysts said. US economic growth slowed to 1.6 percent in the first quarter of 2026.