In May 2025, the U.S. economy added 139,000 jobs, slightly surpassing expectations but indicating a slowdown compared to previous months. The unemployment rate remained steady at 4.2%. However, revisions to March and April figures revealed 95,000 fewer jobs than initially reported, suggesting a more tempered labor market than previously thought.
Wage growth continued, with average hourly earnings increasing by 3.9% year-over-year to $36.24. Despite this, the labor force participation rate declined to 62.4%, with a notable drop of 696,000 in household employment, hinting at underlying weaknesses in the labor market.
Sector-wise, healthcare led job gains with 62,000 new positions, while federal government employment declined for the fourth consecutive month, influenced by cost-cutting measures. Temporary-help services also saw reduced hiring, possibly signaling cautious business sentiment amid economic uncertainties.
While the impact of President Trump’s tariffs on employment hasn’t been immediately evident, businesses remain cautious. Trade policy uncertainties and potential cost pressures are influencing hiring decisions, with some sectors like manufacturing and professional services experiencing job losses.
In response to the mixed economic signals, President Trump has called for a significant cut in interest rates to stimulate growth, but the Federal Reserve has maintained its current stance, awaiting clearer economic indicators before making policy changes.
Overall, while the labor market shows resilience, the combination of slowing job growth, declining participation, and economic uncertainties suggests a need for close monitoring in the coming months.
sources