Despite inflation and low wage growth, US jobs market somehow getting stronger in early 2026?

Today, we got more indications that maybe the US jobs market is showing signs of life this Spring?

US private employers added 122,000 jobs in May, payroll processor ADP said Wednesday.

Economists surveyed by Bloomberg had expected an increase of 120,000 roles, an increase from April’s revised level of 105,000, in a further sign of labor market stabilization. Gains were led by education and health services, though eight of the 10 supersectors ADP tracks posted positive movement.

"Hiring was more broad-based in May than we've seen in the last few years,” ADP chief economist Nela Richardson said in a statement. “The labor market continues to show sustained momentum going into the summer hiring season."…

Meanwhile, Tuesday’s job openings and labor turnover report from the federal government offered mixed signals for job-seekers. Though job openings surged in April to their highest level since May 2024, helping nudge the ratio of vacancies to unemployed workers to its best level since the beginning of last year, the openings were largely concentrated in just one sector: professional and business services.

Hiring, on the other hand, slid. And the quits rate, which is often seen as a barometer of workers’ confidence in the job market, also decreased slightly.

The ADP report has generally had good news for jobs in recent months, with private sector job growth averaging nearly 100,000 a month in that survey since January.

If there are solid job gains going on in 2026, that’s an improvement over what we had in 2025. The “gold standard” Quarterly Census of Employment and Wages (QCEW) had its latest release this week, which went through the end of 2025 and uses records from over 90% of payroll-listed employers.

The QCEW says that less than 300,000 jobs were added for all of last year, and more than half of US states lost jobs in 2025.

To be fair, the QCEW number is slightly above the monthly reports that had total job growth at only 116,000 for last year. So if anything, we would be likely to see slightly upward revisions for jobs when the preliminary benchmarks are released in a couple of months.

But notice how the Midwest wasn’t part of that job growth, and Wisconsin was part of that, with a loss of 4,157 jobs in the QCEW for 2025. That’s still quite a bit better than the loss of 19,000 (!) jobs in the monthly reports we have had for Wisconsin, so those numbers seem certain to be revised up for last year.

However, even if the US jobs market has picked up, wage growth hasn’t. ADP reports that 12-month wage growth is stuck at the lowest levels in 5 years. That is much less than workers were getting during the inflation spikes of 2022, with the premium for job leavers going down significantly.

While it is a good thing for the economy that large numbers of Americans aren’t out of work, it’s also more reason that the Federal Reserve might need to raise rates in the near future. If we aren’t in recession, but inflation keeps rising and the stock market in a speculation Bubble, tightening money is an obvious way to get back toward balance.

It sure makes me wonder why we would continue at 170 basis points below where we were 2 years ago - a time when inflation had been at lower rates than today for well over a year.

Our current level isn't cutting off these rising prices in both products and stocks. Which illustrates why times of stagflation are confounding for policymakers. When you have any growth (speculative or otherwise), prices spike up, wage growth often falls behind, and responsible banks tighten up. This inevitably slows down the economy, although the 2020s version doesn’t seem to have as much hiring or firing as we had 50 years ago (at least so far).

There’s also got to be a point where the higher costs and lack of wage growth leads to a lack of demand for other products. We haven’t seen a lot of it yet in 2026, but if Americans can’t get ahead of their bills, it may explain why consumer sentiment is so bad in a time when jobs are still getting added and unemployment appears to stay low.

We get a new monthly jobs report from the Bureau of Labor Statistics on Friday. We'll see if that also shows decent job growth, if unemployment remains in the low 4%s, and if wage growth continues to struggle. I can't think that all of these trends continue, and at least one of them breaks soon. But despite 3 months of war-induced price spikes, the US job market has yet to get hit.