U.S. Employers Added 139,000 Jobs in May, Showing a Cautious but Resilient Labor Market

Employers in the U.S. added 139,000 positions in May, and the job market gave no indications of losing its steam despite the slowdown in the pace of growth. The labor force participation rate remained at the historically low level of 4.2%, while hiring decreased a bit from the figure of 147,000 reported for April and thus remained better than the estimated 130,000 jobs of the May job market growth.

The healthcare industry was the biggest job creator in the recent employment report as it contributed 62,000 jobs, which was followed by the food and hospitality segment that brought 30,000 people. On the other hand, some areas showed a drop in employment: the federal government reported a decrease of 22,000 jobs, its most significant figure since late 2020, which was mainly the result of the Trump administration’s recruitment freeze and the workforce reduction activities. Similarly, the manufacturing sector recorded a loss of 8,000 positions.

The wage data, however, turned up encouraging signs. The average hourly pay went up by 0.4% from April, thus reaching the growth of 3.9% for the year – a bit more than the expected level and proving that the demand for workers is still strong.

Even if there were positive incremental changes, at the same time, there were several important pieces of negative news. The labor force decreased by 625,000 employees in May, which was the largest reduction since the 2023.12 of December event. The employment-population ratio also fell to 59.7%, its lowest since 2022 early first quarter. Besides, the latest data corrected the March and April job estimates, leaving out an additional 95,000 jobs.

According to economists, the labor market is still managing to hold on, but then again, one can discern that it is definitely starting to cool down. Statistics from this year show that job growth per month has averaged below 124,000 compared to last year and significantly less than the boom in 2022.

It is believed the capricious trade actions that the US has taken are responsible for the increased ambiguity in the economy, the delayed implementation of a set of broad tariffs that were originally scheduled to come into force on April 2 being a major example. The majority of economists and the Federal Reserve officials as well are concerned that these tariffs may cause the CPI to rise again later in the year.

The predictions at present suggest that the Federal Reserve would not deviate from their current strategy. Analysts are of the opinion that as the pressure on prices is marginal and the job market is stable, even if the growth is slowing down, the majority of them reckon the Fed will postpone any decision on rate changes until at least September. It appears that the rate of change in interest rates will hang in the balance, depending on whether hiring takes a deeper fall or in case of a more widespread weakness in the economy.

Although the labor market is witnessing some sectors doing very well, such as the job opportunities that amounted to 7.4 million in April, the increase in the number of workers who are laid off and lower quit rates are signs that both employers and employees are being more cautious.

As Daniel Zhao of Glassdoor puts it, “The job market is still standing tall even as some of these headwinds start to blow. But ultimately, we’re all still waiting for the other shoe to drop.”