The US economy added 172.0K jobs in May, roughly double what Wall Street had forecast. It was the third consecutive month of payroll gains above 100.0K.

The unemployment rate held at 4.3% for a third straight month, in line with expectations.

March and April payrolls were each revised higher, contributing a combined 93.0K additional jobs. The revisions brought the three-month average to 188.0K per month.

That pace hasn't been seen since early 2024.

"The hiring recession is over," said Heather Long, chief economist at Navy Federal Credit Union. "American firms are hiring again."

Leisure and hospitality led all sectors, adding 70.0K jobs in May, well above its 12-month average of 14.0K per month, with analysts pointing to preparation for the FIFA World Cup as a possible driver.

Local government added 55.0K jobs, its biggest monthly gain in over two years.

Healthcare and social assistance contributed 47K jobs, while construction posted modest gains for the third straight month.

Not every sector shared in the rebound. Retail, information, and finance all shed jobs. Air transportation cut roughly 9.0K positions, reflecting the collapse of Spirit Airlines.

"Employers have a better sense of the growth backdrop," said Sarah House, a senior economist at Wells Fargo.

Wages Are Losing Ground to Inflation

Year-over-year average hourly earnings rose 3.4% in May. That slowed from 3.6% in April.

With inflation running at a three-year high following a surge in oil prices tied to the ongoing Iran conflict, pay may be running nearly 1 percentage point below inflation, per CNN projections for the upcoming May Consumer Price Index reading.

Joe Brusuelas, chief economist at RSM US, told CNN that accelerating job growth is hard to celebrate when real wages are falling and the median worker is struggling to keep up.

Households are also drawing down savings. Real disposable income has fallen for three straight months and the saving rate sits at a four-year low.

The share of long-term unemployed, those out of work for 27 weeks or more, rose to 27.5% in May, the highest level since December 2021.

Rate Hike Now a Real Possibility

Strong hiring has shifted the conversation at the Federal Reserve. Traders lifted the odds of a rate hike by December to roughly 65%, according to LSEG estimates. That was up from 48% before the report.

The Fed's benchmark rate currently sits in the 3.50% to 3.75% range.

Treasury yields climbed, and stocks sold off after the report. The S&P 500 fell 1.4%. The Nasdaq lost 2.4%.

More than 90% of S&P 500 companies have reported first-quarter results. Year-over-year earnings-per-share growth came in at roughly 29%, per LSEG data cited by The Wall Street Journal.

The hiring numbers look healthy on paper, but for many workers the paycheck isn't keeping pace with the price of a full tank of gas.