The job market has been recovering this year from a miserable 2025, so far shrugging off higher energy prices and increased economic uncertainty since the U.S. and Israel attacked Iran in late February.
By Paul Wiseman and Anne D'Innocenzio, Associated PressFILE - A job seeker waits to talk to a recruiter at a job fair Aug. 28, 2025, in Sunrise, Fla.
WASHINGTON — The American job market continues to show surprising strength — good news for President Donald Trump who has taken a beating in the polls over the surging gasoline prices that followed U.S. and Israeli attacks on Iran. Employers added 172,000 jobs in May – roughly double what forecasters had expected – and the unemployment rate remained at a low 4.3%, the Labor Department reported Friday.
Hiring has bounced back this year from a miserable 2025, showing resilience in the face of economic uncertainty and painfully high energy prices since the Iran war started in late February. The job gains are broad-based. Local governments added 55,000 workers, restaurants and bars 48,000, healthcare companies 35,000. 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.
“The hiring recession is over. American firms are hiring again,” said Heather Long, chief economist at Navy Federal Credit Union. ”The 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.
"With just five months to go before consequential midterm elections in the U.S., Americans have grown increasingly frustrated by rising costs, and it’s unclear if the strong job numbers this year will change their gloomy view of the economy. Inflation data last week showed that in addition to gasoline, prices for groceries, clothing and electricityAlaskans are increasingly falling short on debt payments, state report saysPolls show that Trump’s approval rating on the economy is falling sharply after being reelected largely on the promise of taming inflation.
And despite the pickup in hiring, wage gains were modest. Average hourly wages rose 0.3% from April and 3.4% from May 2025. Many young people are still 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. But the labor market is clearly improving. Last year, employers added 9,700 jobs a month, the fewest outside a recession since 2002. Hiring has rebounded, averaging 114,000 new jobs a month so far this year.
Friday’s report “really is a positive surprise, particularly given the headwinds from the Iran conflict, which clearly led to much higher energy prices and which are going to act to slow economic activity to some degree,” said Ryan Nunn, research director at Yale University’s Budget Lab. The economy, Nunn said, has been boosted by a surge in investment in artificial intelligence.
Also helping are lower tariff rates since President Donald Trump has effectively lowered the massive import taxes he imposed last year — and the Supreme Court in February struck down his most sweeping levies, setting the stage for businesses to get back money they’d paid. Big tax refunds — the product of Trump’s 2025 tax cuts — have given the economy a lift, offsetting the impact of higher energy prices.
But the refunds have mostly been pocketed, and gasoline prices have remained above $4 per gallon since March. U.S. financial markets retreated after the jobs data was released Friday. Healthy hiring has raised the odds that the Fed’s next move will be an interest rate increase, a sharp change from the start of the year when central bank officials had still penciled in two rate cuts for 2026.
Wall Street now expects a rate hike in December, which would be sharply at odds with Trump’s repeated demands for a cut. An increase by the Fed could lead, over time, to higher borrowing costs for mortgages, auto loans, and business loans.
“Higher rates are coming, particularly when inflation is above target and clearly moving in the wrong direction,” said Dario Perkins, an economist at TS Lombard. “The only question is when. ”Uncle Giuseppe’s Marketplace, which operates 12 grocery stores across New York and New Jersey, is on a hiring spree. President Mike Nelson announced last fall that he wanted to add 1,000 workers over the next year, pushing the company’s payrolls past 3,500.
“We’re looking for a butcher who can cut meat in the store and engage with our customers and give them cooking ideas and speak to them about what makes the product special,” he said. “You don’t find that everywhere now. ” Like other chains, Uncle Giuseppe’s has benefited as Americans cut back on dinners out because of soaring gas prices.
The company is marketing specials to lure inflation-scarred shoppers, like a $39.99 chicken Parmesan and pasta meal for a family of four that includes a loaf of bread and a salad. Wieder is feeling optimistic because he expects $2 million in tariff refunds after the trade policies of President Trump were shot down by the courts. He is planning to use that money for hiring, but gotten less than $50,000 in refunds so far.
He has roughly 20 employees who work in marketing, operations, customer service and other areas for his New York company. He said he’s looking for applicants that will embrace artificial intelligence. Lalo has already been using AI tools in areas like marketing and plans to launch an AI tool on Monday that helps parents potty train their children. AP Economics Writer Christopher Rugaber contributed to this report. Anne D’Innocenzio reported from New York.
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