U.S. hiring reduced in May to only 139,000 jobs

Key Points

• U.S. employers added 139,000 jobs in May, modestly above economists’ forecasts of 125,000 but reflecting a cooling labor market amid trade tensions and policy uncertainty.
• Data for March and April were revised downward by a combined 95,000 jobs, with April’s gain cut from 177,000 to 147,000, highlighting slower hiring earlier this year.
• Wage growth persisted even as employment in temporary help services fell and the labor force participation rate dipped to 62.4%, signalling increased employer caution.
• Federal employment decreased by 22,000 jobs in May (59,000 over four months), while sectors like healthcare, social assistance, hospitality and leisure accounted for most of May’s job gains.

Employers in the United States added 139,000 jobs in May, indicating a cooling labor market as companies deal with trade tensions and policy uncertainty. On Friday, the Labor Department announced that job gains marginally surpassed the 125,000 predicted by economists. According to a separate household survey, the unemployment rate stayed at 4.2% despite the slight increase. Previous data revisions revealed lower U.S. hiring earlier in the year than first stated. In March and April combined, employers created 95,000 fewer jobs than initially projected. The updated number for April fell from 177,000 to 147,000.

U.S. hiring reduced in May to only 139,000 jobs

The U.S. market responded quite well to the report, as stocks generally stood firm or increased. “The market is happy it’s not worse, given everything we’re dealing with in terms of uncertainty and tariffs,” said Priya Misra, a portfolio manager at J.P. Morgan Asset Management. “The job market is the linchpin of the economy, and it still looks like it’s chugging along—at a slower pace, but that’s OK.”

Earlier in the week, a number of labor indicators indicated strain, so investors had prepared for a weaker report. ADP’s private-sector data showed the slowest U.S. hiring pace in more than two years, Challenger, Gray & Christmas reported a rise in job cuts compared to a year ago, and unemployment claims reached a seven-month high.

Across all sectors, hiring remained cautious. Businesses avoided mass layoffs but were hesitant to fill open positions because they were still recovering from the post-pandemic labor shortages. Brett Ryan, senior U.S. economist at Deutsche Bank said, “It’s a low-hiring, but low-firing environment. There aren’t definitive signs of an impending, more serious downturn. Is it necessarily a very strong labor market or strong hiring environment? No. But we’ve known that for the past six to twelve months.”

Changes in other areas

Wage growth persisted, bolstering consumer expenditure. However, employment of temporary help services declined, suggesting that employers were cutting costs. Temporary employees, who are frequently the first hired and fired, offer a window into the mood of the company.

The labor force participation rate fell from 62.6% to 62.4% as a result of a significant 696,000-person decline in employment, according to the household survey. The unemployment rate would have slightly increased in the absence of this drop.

For the fourth consecutive month, federal employment decreased by 22,000 jobs in May. The federal workforce has lost 59,000 jobs in the last four months. Despite President Trump’s emphasis on cutting the federal workforce, some cuts have been postponed due to legal challenges, and many impacted employees are still on paid leave or severance.

62,000 new jobs were created in the healthcare industry. Social assistance, hospitality, and leisure all showed growth. Construction and manufacturing, two sectors that are sensitive to tariffs, on the other hand, saw little growth; manufacturing even reported a slight decline in employment.

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