Chart of the Week

Steady hiring, fewer layoffs

June 9, 2026

Time to Read: 3 mins

May’s jobs report showed a labor market that is improving, with payroll growth exceeding expectations and layoffs down sharply from last year. Steady hiring and fewer layoffs should continue to support consumer spending and U.S. economic growth.

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Last week’s jobs report showed that the U.S. labor market remains more resilient than expected. Nonfarm payrolls rose by 172,000 in May, well above consensus expectations for 88,000. Upward revisions to the prior two months also suggest hiring momentum has been firmer than initially reported, reinforcing the view that labor demand has held up despite ongoing geopolitical uncertainty.

So far, the labor market is better than last year. Year-to-date payroll gains total 569,000, compared with 182,000 over the same period in 2025. Layoffs have also moved in a more constructive direction. Year-to-date layoffs stand at 398,000, down sharply from 696,000 at this point last year.

Looking ahead, job growth is likely to settle into a more moderate range due to aging demographics and lower immigration. Still, as long as hiring continues and layoffs remain contained, consumer spending, the backbone of the U.S. economy, should remain positive.

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Is the market rally broadening?

Stocks, as measured by the S&P 500, are up over 13% through early August. The solid gains have been fueled by a resilient economy, steady consumer spending, optimism around artificial intelligence and better-than-expected earnings growth. Still, some investors worry the advance may be too concentrated in technology and that AI-capex monetization may fall short of expectations. A closer look suggests that it is not just tech moving the market higher.

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Fed friction?

Markets are navigating tensions between a Fed that offers less guidance and an inflation backdrop that remains sticky. Added uncertainty from Middle East tensions and energy-price swings is further shaping sentiment, with recent moves in Treasury yields suggesting the market wants the Fed to hike. However, with yield volatility expected to linger in the near term, we see today’s elevated Treasury yields as an especially compelling opportunity in fixed income.

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Sizing up small caps

Small caps have outperformed this year despite the threat of higher interest rates, suggesting the rally is being driven by more than just diversification away from large cap tech stocks. Improving earnings expectations and a resilient U.S. economy support our view that small caps have further upside from here.

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Muni yields are attractive

The war in Iran has increased volatility across fixed income markets, pushing municipal bond yields higher as investors reassess inflation risk, energy costs and the path of Federal Reserve policy. Even so, historically elevated municipal bond yields present a compelling opportunity for tax-sensitive investors.