Job seekers visit the Generali Global Assistance recruiting booth during the Mega Job News USA South Florida Job Fair at Amerant Bank Arena on April 30, 2026 in Sunrise, Florida.
Joe Radle | Getty Images
The better-than-expected start to job creation this year could get a reality check Friday when the Bureau of Labor Statistics releases its May nonfarm payrolls report.
Economists surveyed by Dow Jones expect the jobs report to add just 80,000 jobs for the month, one notch below the average of 150,000 over the past two months, including 115,000 in April.
Additionally, some prominent voices on Wall Street believe the month could see a rebound in the labor market, which was depressed at this time last year, and there is downside risk to the headline numbers.
“We continue to see and hear the sentiment that as long as there’s a job, you’re good to go right now, there’s not enough people to hire, and there’s little desire to hire,” said Laura Ulrich, director of economic research at Indeed Hiring Lab. “The trend continues to be that people want these types of jobs. But if you’re looking for a job, it’s a very difficult time to find one because the hiring rate is so low.”
Ulrich added that he would “not be surprised” if May’s numbers were in line with or below consensus. BLS data earlier this week showed that job openings unexpectedly surged in April, but the level of job separations was the lowest since pandemic-era August 2020. The consensus is that the unemployment rate is expected to remain stable at 4.3%.
“From a macro perspective, we’re going to see stagnation because if people don’t leave their jobs and don’t create new jobs, the market is just going to be pretty stagnate,” she said.
Around Wall Street, hopes are waning as economists expect mild weather and other seasonal factors to boost past numbers other than February, the year’s only negative month, when jobs fell by 156,000.
There are also signs that layoffs will increase.
Challenger, Gray & Christmas said its planned layoffs totaled 97,006 in May, an increase of 16% from April and the highest total for the month since 2020, when the coronavirus pandemic led to large-scale layoffs. The previous May high was in 2009, near the bottom of the global financial crisis. The company also announced a total of 38,242 announced artificial intelligence layoffs, the highest single-month total since Challenger began collecting data about three years ago.
The number of new unemployment insurance claims last week was the highest since early February.
Goldman Sachs noted that “the big data metrics we track for job growth slowed” during the month, and predicted that payrolls would increase by just 60,000 jobs. Adam Schickling, Vanguard’s chief economist, expects that number to remain at just 20,000, “as we expect a partial softening of the strong (January)-April employment report, which was skewed by unseasonably warm and dry weather.”
Similarly, EY Parthenon forecasts an increase of 50,000 people, which by most estimates would be enough to barely change the unemployment rate from its current level, perhaps with a slight upward bias.
“The resignations reflect a backdrop of strong weather-related conditions and a still cautious employment outlook,” Gregory Daco, the company’s chief economist, said in a note. “We expect the unemployment rate to rise slightly to 4.4%, consistent with a labor market where labor demand and supply are slowing in tandem.”
From a policy perspective, consensus is almost certain to keep Fed policy unchanged, as it has been this year. Markets are pricing in that there is little chance of any policy action at the June 16-17 Federal Open Market Committee meeting. In fact, the Fed’s pause is expected to last until the end of the year, increasing the likelihood of a rate hike in early 2027 if inflation continues.
“For the Fed, a stable labor market and persistently high inflation make it more likely that a more hawkish and two-faced policy statement will be issued at the next FOMC meeting,” Darko said. “Officials are likely to stress that rate hikes are on the table if inflation proves to persist further.”
