The US job market is up—way up

According to the Bureau of Labor Statistics, the US job market has been working overtime—piling on 172,000 jobs in May, more than double the expected 80,000.

This feverish hiring spree is a sign that employers are shaking off Iran and inflation jitters and breaking out of their “low hire, low fire” rut, although only halfway. Hiring jumped, but firing didn’t budge, with unemployment holding firm at 4.3%, in line with forecasts. Average hourly wages also came in around the Wall Street consensus, rising 0.3% from last month and 3.4% since last year to $37.53—though, that’s the lowest annual increase in five years. To quote economist Heather Long, “It's easier to get a job now, but it's hard to find a job where your pay will keep up with current inflation.”

Some analysts chalk up this blowout to “catchup” hiring for roles that spent the last year on ice while tariff turmoil and government cuts had employers spooked. This BLS report also revised numbers for the previous two months, way up. March gained 29,000 jobs to total 214,000; April added 64,000 for 179,000.

Who’s hiring: Leisure and hospitality led the charge with 70,000 new gigs—five times its monthly average of 14,000—as bars and restaurants alone gobbled up 48,000 roles as they bulked up to brace for World Cup crowds. Beyond the hospitality boom, local governments weren't far behind with 55,000 hires, and healthcare did its dependable thing by adding another 35,000 positions.

What this means for rates: This red-hot report all but obliterates any chance that the Federal Reserve will slash interest rates at its next meeting June 16-17. According to the CME Fedwatch tool, the odds of a rate cut by end of year have shrunk to under 1%. Meanwhile, the odds of a rate hike have hit 50%.

This could be awkward for the Fed’s new Chair Kevin Warsh, whom President Donald Trump picked with none-too-subtle hopes of rate cuts. So far, though, the economy isn’t playing along. Inflation hit a three-year high of 3.8% in April, and the labor market is blinking. Both sides of the Fed’s dual mandate now point the same way, and neither is where Trump wants to go.

How markets reacted: This blockbuster jobs report kicked stocks in the pants right as they were already on their way down amid today’s chip sell-off. Investors, like Trump, have been eagerly waiting for rate cuts, and now that a cut isn’t in the cards, indexes caved.

Here’s to hoping those recently hired bartenders are up to speed ASAP, since Wall Street’s going to need a drink.—JD