Jobs Report May 2025: 139,000 New Positions Added, Unemployment Rate Remains Steady.

Jobs Report May 2025:

In May, U.S. payroll growth slowed somewhat as companies added 139,000 positions amid anxiety about President Trump’s broad import tariffs, federal government layoffs, and immigration crackdown. The Labor Department reported that the unemployment rate remained at 4.2% on Friday.

Bloomberg surveyed economists who estimated that 125,000 positions were added last month prior to the report’s release. The labor market was found to be weaker than anticipated in late winter and early spring, as the job gains for March and April were revised down by a combined 95,000. They reduced the total for March from 185,000 to 120,000, and the total for April from 177,000 to 147,000.

Nationwide Chief Economist Kathy Bostjancic wrote in a note to clients that employment gains are moderating as many companies remain in a holding pattern and are hesitant to engage new workers amid heightened uncertainty about the impact of tariff policies on economic growth. “At the same time, they are not significantly reducing the number of employees.”

At present, which sector is experiencing the highest employment rates?

The employment gains were once again led by health care, which has been a consistent job generator in recent years, with 62,000 new positions. 48,000 were added by leisure and hospitality. However, the extent of employment creation is diminishing, which may indicate a more extensive slowdown in the future. Retail lost 6,500 jobs, professional and business services shed 18,000 positions, and manufacturing, which has been struggling due to tariffs, lost 8,000 jobs.

In response to the Trump administration’s extensive reductions, the federal government has eliminated 22,000 positions and has reduced its workforce by 59,000 since January.

Are wages in the United States on the rise?

The average hourly earnings increased by 15 cents to $36.24, which resulted in a slight increase in the annual rate from 3.8% to 3.9%. Wage growth has experienced a decline recently and, following a peak of 5.9% in March 2022 as a result of pandemic-related worker shortages, is now approximately in accordance with the Federal Reserve’s 2% inflation objective, according to Oxford Economics.

Is it possible for interest rates to decrease in 2025?

It is unlikely that the Federal Reserve will be persuaded to lower its key rate at a meeting in mid-June as a result of the substantial job gains that occurred in May. Fed officials have indicated that they will likely maintain their current stance until they ascertain whether Trump’s tariffs will have a greater impact on the economy or inflation, following a one-point reduction in interest rates late last year.

A feeble May jobs total could have at least prompted officials to consider lowering rates in the near future, particularly if it was followed by another soft reading for June. In order to combat inflation, the Federal Reserve either increases rates or maintains them at a higher level for an extended period. In order to prevent or alleviate recession, it reduces interest rates.

However, the Federal Reserve’s mission may be complicated by President Trump’s immigration crackdown. The Labor Department’s household survey revealed a significant decrease in employment last month, which was partially mitigated by a substantial decrease in the labor force, which is the number of Americans who are either employed or seeking employment.

This decline can be attributed to immigration restrictions. This prevented the unemployment rate from increasing, and economists have suggested that a comparable dynamic in the upcoming months could make it more difficult for the Federal Reserve to reduce rates, despite the weakening of job growth.

Is the employment market currently favorable or unfavorable?

Employment gains have averaged 124,000 per month this year, a decrease from 168,000 in 2024, despite the challenges posed by Trump’s economic policies. Despite this, the labor market has maintained its stability. However, a significant number of analysts anticipate that the decline will become more pronounced in the months ahead. The projected downshift is fundamentally rooted in Trump’s trade strategy.

The high double-digit tariffs that he imposed on dozens of countries in April were temporarily suspended, and in May, he agreed to reduce the levies on Chinese imports from 145% to a still-elevated 30%. China consented to concessions that were broadly comparable. However, the actions are contingent upon the conclusion of additional agreements between the United States and others, including China. Tariffs of 25% are still in effect on all imported cars and a significant number of products from Canada and Mexico. Trump increased the tariff on steel and aluminum imports from 25% to 50% this week.

Although a trade court last month invalidated a significant number of Trump’s tariffs, they continue to be in effect during an appeal, which increases the uncertainty for businesses. Within a month or two, economists anticipate that the duties will suppress consumer spending and reignite inflation. The costs have also increased corporate uncertainty, resulting in a reduction in investment and hiring.

What is the total number of federal employees who are being terminated?

Morgan Stanley stated in a report that the Department of Government Efficiency under the Trump administration has eliminated as many as 120,000 federal positions. However, numerous employees have been placed on administrative leave, resulting in their continued presence on U.S.

payrolls while they await court proceedings. Others who are on paid leave or receiving severance are also considered to be employed. However, the reductions have begun to affect the employment statistics, as evidenced by the 22,000 federal job losses in May and the 59,000 since January.

Are immigrants still arriving in the United States?

Lydia Boussour, an economist at EY-Parthenon, wrote in a note to clients that the administration has canceled or declined to renew work permits and other protections for hundreds of thousands of migrants, in addition to intensifying enforcement at the southern border. She stated that this will likely result in a reduced labor supply, which will further restrict hiring, particularly in industries like construction and hospitality.

However, despite the general slowdown in hiring, other economists believed that job growth remained robust last month as companies, frustrated by labor shortages during the pandemic, continued to reduce redundancies. Initial jobless claims, which are a reliable indicator of reductions, have increased in recent months but have remained historically low.

Capital Economics and Barclays both anticipated a 150,000 increase in employment for May. However, Barclays anticipates that the average monthly employment gains will be reduced to approximately 75,000 by the end of the year due to tariffs, federal layoffs, and immigration restrictions.