SouthernWorldwide.com – The U.S. job market is demonstrating unexpected resilience, adding 172,000 jobs in May, significantly surpassing economists’ predictions.
This figure continues the robust hiring trend seen in the preceding two months. Average monthly job growth between March and May has more than tripled compared to the previous year, rising from approximately 63,000 to nearly 190,000 new jobs.
The economy has navigated numerous challenges over the past year. These include the highest tariffs in over seven decades, geopolitical tensions stemming from the Iran war, resurgent inflation, and widespread public pessimism, often termed a “vibecession,” due to the high cost of living.
Despite these headwinds, the labor market has shown remarkable strength, especially after a period of weakening in late 2025 and early 2026.
Economists attribute this recent surge in job growth to several factors. Strong corporate profits are a key driver, providing companies with the financial flexibility to hire, according to Bret Kenwell, an investment analyst at eToro.
U.S. corporations reported a substantial increase in earnings growth, averaging about 28% in the first quarter. Furthermore, 85% of S&P 500 companies exceeded analysts’ profit expectations, marking the highest proportion in nearly five years, as indicated by a FactSet analysis.
Over the past two years, corporate earnings growth has averaged a healthy 11%. Current analyst projections anticipate second-quarter profit growth to reach around 22%, according to the financial data firm.
The tax cuts and other economic incentives introduced by the Republican “One Big Beautiful Bill” are also credited with bolstering corporate profitability, according to Wall Street analysts.
The positive impact of stronger corporate growth and profits is particularly evident in the healthcare sector. This industry has been the primary engine of job creation over the last year, adding 610,000 jobs, significantly more than any other sector, according to a recent analysis by job search firm Indeed.
The leisure and hospitality sector followed, contributing the second-largest number of new jobs at 240,000. This growth in healthcare employment is linked to the aging U.S. population, as the baby boomer generation requires increased health services as they approach their late 70s, stated Laura Ullrich, Indeed’s director of economic research.
In addition to healthcare, hiring remained strong in leisure and hospitality in May, driven by the anticipation of the summer travel season and the upcoming 2026 World Cup, which begins in June.
The May jobs report revealed a broader base of job growth than previously observed. Ullrich noted increases in leisure and hospitality, local government employment, and continued gains in health care and social assistance.
Seasonal demand likely played a role in May’s hiring figures. For instance, local governments added 55,000 jobs, potentially reflecting increased demand for summer workers in parks, public works projects, and other seasonal operations, according to Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth.
Leisure and hospitality companies, which hired 70,000 new employees last month, likely needed to staff up to accommodate the anticipated surge in tourism and travel during the summer months, he added.
The robust hiring in these sectors is considered a positive indicator for overall economic activity, Pappalardo commented.
Pockets of Weakness
Despite the recent upturn in job growth, public sentiment regarding job prospects remains cautious. A recent CBS News poll indicated that 7 out of 10 Americans believe it would be difficult to find a new job.
This pessimism might stem from the labor market’s weakness experienced in late 2025 and early 2026, when employers reduced payrolls by an average of 4,300 jobs per month between December and February.
However, the encouraging employment figures of late do not present the complete picture. Both hiring and quit rates remain subdued, suggesting that workers are hesitant to leave their current positions for new opportunities due to a lack of readily available better options.
For individuals who are unemployed, the low layoff rates offer little solace when tepid hiring makes the job search process more challenging.
Furthermore, certain industries have experienced job losses over the past year, indicating underlying weakness despite the strong overall payroll numbers, Ullrich pointed out. Sectors like government and financial services have seen employment declines of 174,000 and 107,000 jobs, respectively, according to Indeed’s analysis.
“Seven sectors are showing year-over-year employment increases, while seven sectors are experiencing decreases,” Ullrich stated.
Certain demographic groups, such as recent college graduates and individuals who have been laid off, are also facing difficulties in finding employment. In April, nearly 28% of the unemployed had been jobless for over six months, the highest proportion recorded since December 2021.
“Two things can be true simultaneously,” Ullrich explained. “You can have a relatively strong jobs report for May, and job seekers can still be struggling. Both of these scenarios are possible at the same time.”
