US Job Growth Hits 16-Month High in May, Strengthening Labor Market

ADP data beat estimates as broad-based gains across all sectors and company sizes raise the odds of a Fed rate hike.

122K jobs added, the most since Jan 2025. Here’s what it means for rates and markets.

Today’s Rates

Strong labor data is shifting the conversation at the Fed. A growing number of officials are signaling the next rate move is equally likely to be a hike as a cut. The FOMC meets June 16-17. Watch Friday’s official government payrolls report; consensus expects +85,000, which would mark the strongest 3-month stretch in over a year.

​Key Takeaways:

 ADP reported 122,000 private-sector jobs added in May, the most since January 2025 and above the 120,000 consensus estimate

Education & health services led gains (+57,000), followed by trade, transportation & utilities (+36,000), a positive signal for the industrial market and office space pivoting to medical use.

Job growth was broad-based across company sizes and sectors

Job-switcher pay rose 6.5% YoY (slowing from prior month); job-stayers saw wages hold steady at +4.4%

​Wildcard: Iran War Impact

​​Rising energy costs tied to the ongoing Middle East conflict have already pushed inflation higher and consumer sentiment to record lows. The key question going forward: will war-driven headwinds start to weigh on hiring as the conflict enters its fourth month?

​​Bottom Line: Labor market momentum is real, but so is the policy uncertainty. CRE is feeling the push and pull.