May Payroll Report Favorable, Maybe Flukey

The May 2026 payroll report indicates 120,000 new private-sector jobs, though much of this growth is attributed to the restaurant sector. Western Asset views this as supportive of non-inflationary growth and believes bond market fears of Fed tightening are unjustified.

Key Takeaways

• 1.The May payroll report shows private-sector job growth of 120,000, but gains are heavily concentrated in the restaurant and bar sector.
• 2.Market fears of Fed tightening due to the jobs report are likely misplaced given restrained wage growth.

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