U.S. labor market stronger than expected, impact on the dollar exchange rate

U.S. labor market surprises on the upside. May data lift view of the economy’s health

The May U.S. labor market report painted a clearly better picture than the market had expected. Nonfarm payrolls, or NFP, rose by 172 tys. in May 2026 from the previous month. That is nearly twice as much as the consensus had anticipated, with economists expecting a gain of 85 tys. jobs.

The private sector looked strongest, with employment up by 120 tys.. The public sector added 52 tys. jobs. For the foreign exchange market, this is an important signal, as a stronger labor market usually reduces pressure on the Fed to ease monetary policy quickly.

Even more important were the revisions to previous months’ data. The April and March adjustments added a combined 93 tys. jobs. That lifted this year’s monthly average to almost 114 tys. new jobs. At the same time, February was revised down by 156 tys., showing that the labor market had been weaker than the initial readings suggested.

After these changes, the last three months are closer to the +200 tys. jobs level, a clearly stronger-than-average result. Without the revisions, the May data would have looked much more modest. The BLS had previously reported, among other figures, +115 tys. for April, +178 tys. for March and a drop of 92 tys. for February.

The unemployment rate stood at 4,3% in May and was unchanged from April and March. In the BAEL, or labour force survey, the number of unemployed fell by 66 tys., while employment rose by 149 tys. The economically inactive population also increased by 17 tys. In practice, that means the U.S. labor market remains fairly resilient.

Wage growth was more restrained. Average hourly earnings came in at 37,53 USD in May 2026, up 0,32% from the previous month and 3,45% from a year earlier. The market had expected gains of 0,3% m/m and 3,4% y/y, so the reading did not deviate meaningfully from forecasts. The average workweek was unchanged at 34,3 hours.

Sources

1. Current exchange rates: National Bank of Poland (average exchange rate table)