May Payrolls Jump 172,000 But Gains Concentrated in Just Three Sectors

The U.S. economy added 172,000 jobs in May, but nearly all of the growth came from leisure and hospitality, local government, and healthcare, raising concerns about narrow hiring breadth that mirrors the stock market’s dependence on mega-cap tech. The three sectors contributed 160,200 of the total payroll gain, while all other industries combined added just 11,800 jobs. The unemployment rate held at 4.3%, and prior months were revised higher. Financial activities shed 22,000 positions, and information payrolls declined. RSM chief economist Joe Brusuelas said a $1.6 trillion capital expenditure boom in AI infrastructure could eventually broaden hiring, but for now the labor market is a “split-screen economy” with strength concentrated at the top. The report leaves open whether the narrowness is a late-cycle warning or an early sign of a wider expansion still to come.