The Labor Market Is Heating Up

Job growth beats expectations ahead of summer break

Wowee!!!! That’s it. That’s my response to this morning’s jobs report.

Payrolls grew a massive +172k in May, well above expectations. April was also revised up +64k to +179k, and March was revised up +29k to +214k.

The labor market appears to be motoring along — an average of +188k jobs over the past three months — after a slow 2025.

Here’s the key point: When the labor market looks like this, take that recession talk off the table.

And perhaps this graph tells the real story: unemployment is stabilizing at a reasonably happy level.

All this points to the Fed turning its attention more fully to fighting inflation, rather than unemployment.

New Fed Chair Kevin Warsh has been under pressure from President Trump to cut interest rates, but other Fed officials have been looking to hold rates steady or even raise them. These numbers won’t convince them otherwise. There’s no rate cuts coming anytime soon, no matter what the President — or his appointee — want.

Digging a little deeper: It's worth watching where jobs are being created.

May had more widespread growth than previous months, but healthcare and social assistance still dominates the story of the past 16 months.

Since Trump returned to office, that sector has added 901,500 jobs. Meanwhile, the rest of the economy has shed 168,500 jobs in that same time span.

This helps explain another trend: women continue to outpace men in job growth. They now account for 77% of all net new jobs during Trump’s second term.

That’s down a bit from the 86% we discussed in this recent piece, but the drivers and implications remain the same.

I want to leave you with two final but crucial points:

If you’re not changing your view based on these data, you’ve got partisan blinders on. We can find reasons to be concerned about specific sectors or demographics as we dive into the details, but the overall trend from the last three months suggests a real, robust improvement in the overall strength of our labor market.

I’m also seeing a lot of people doubting these numbers, and I want to be clear — that is conspiracy theorizing. These are legitimate numbers, put out by legitimate public servants with no political interference. I have plenty of friends in the Bureau of Labor Statistics, and if the numbers were being fiddled with, they would have told me, and I would tell you. These numbers are legit. That might change, but today isn’t that day.