Jobs grow but wages lag in latest employment report

San José, CA - The latest employment snapshot from the Bureau of Labor Statistics shows May added 172,000 net new jobs, a gain that keeps three consecutive months above 150,000 despite revisions upward for March and April. The unemployment rate held at 4.3%. Job growth centered in the hospitality sector, which added 70,000 positions, representing about 40% of total growth, followed by local government (excluding schools) with 55,000 and healthcare with 35,000. Together these three areas accounted for nearly 90% of net gains, underscoring the uneven nature of the rebound.

Analysts warned that momentum may slow as households face higher prices than wages. The report notes long-term unemployment rose by more than a third from a year earlier, now accounting for 27.5% of all unemployed, while wage growth slowed to 3.4% year over year. A CPI trajectory around 4.2% is expected, potentially widening the gap with wage gains. The combination of solid payrolls and rising inflation pushed bond yields higher and pressured stock valuations, with the NASDAQ-100 leading declines and the S&P retreating about 2.5%.