The Bureau of Labor Statistics will release its May nonfarm payrolls report Friday, and expectations on Wall Street are decidedly cautious heading into the data.
Economists surveyed by Dow Jones expect just 80,000 jobs were added during May, a notable step down from the average of 150,000 over the prior two months.
April’s payroll gain came in at 115,000, meaning May’s anticipated figure would represent a meaningful deceleration in hiring momentum across the economy.
Some prominent Wall Street voices believe the month could feature a catch-up for a labor market that was teetering at this time last year, with risks skewed to the downside.
“We’re continuing to hear and see the low-hire, low-fire sentiment, which is that if you have a job, it’s OK right now,” said Laura Ullrich, director of economic research at Indeed Hiring Lab.
Ullrich added that “people are continuing this kind of job-hugging trend. But if you’re looking for a job, it’s a very hard time to find a job because hires are so low.”
She said she “wouldn’t be surprised” if the May number comes in at or below consensus, with the unemployment rate expected to hold steady at 4.3%.
“From a macro point of view, we’re going to see stagnation, because if people aren’t leaving jobs and they’re not creating new jobs, it’s just a quite stagnant market,” she said.
Signs of elevated layoffs are adding to the downbeat outlook ahead of Friday’s release, with multiple data points pointing toward broader labor market softness.
May saw a total of 97,006 planned reductions, a 16% increase from April and the highest total for the month since 2020, according to Challenger, Gray and Christmas.
The firm also reported that artificial intelligence-related announced job cuts totaled 38,242 in May, the highest single-month total since Challenger began collecting the data roughly three years ago.
Initial jobless claims last week posted their biggest total since early February, adding further evidence that the labor market is losing some of its earlier resilience.
Goldman Sachs is expecting payroll gains of just 60,000, noting that “big data indicators of job growth we track slowed” during the month of May.
Vanguard chief economist Adam Schickling is forecasting a mere 20,000 jobs added, “as we expect a partial unwind from the strong [January]-April jobs numbers that were biased by unseasonably warm and dry weather.”
EY-Parthenon is expecting growth of 50,000, with chief economist Gregory Daco noting the “step down reflects some payback from earlier weather-related strength and a still-cautious hiring backdrop.”
“We expect the unemployment rate to edge higher to 4.4%, consistent with a labor market where labor demand and supply have slowed in sync,” Daco said in a note.
From a policy perspective, any result near consensus is almost certain to keep the Federal Reserve on hold, as it has been throughout the year, with markets pricing in virtually no chance of a move at the June 16-17 Federal Open Market Committee meeting.
“For the Fed, a stable labor market alongside still-elevated inflation raises the odds of a more hawkish, two-sided policy statement at the next FOMC meeting,” Daco said.
“Officials are likely to emphasize that rate hikes would remain on the table if inflation proves more persistent,” he added, underscoring the delicate balancing act policymakers now face heading into the second half of 2026.
