Job growth slows in U.S. labor market, recording 139,000 new positions in May.
Fresh Take:
The U.S. hired 139,000 new workers in May, a figure that surpassed predictions but indicates a labor market gradually easing. The report issues by the Bureau of Labor Statistics on Friday showed a decline from the revised 147,000 jobs added in April. The unemployment rate stayed put at 4.2%, yet it's important to note that this figure remains near record lows.
The markets reacted positively to the news, with stocks rising and bond yields increasing. However, the optimistic boost didn't last long as investors started to worry about the Federal Reserve maintaining higher interest rates for an extended period due to the job market's steady state.
Federal government employment shed 22,000 roles in May, a trend related to administration cuts and the Department of Government Efficiency project spearheaded by tech magnate Elon Musk.
Although job growth continues, the report shows signs of a weakening labor force. The rate of employed workers to the total population dropped to its lowest since the pandemic, while an alternative unemployment measure, including "discouraged" workers, reached a post-pandemic high of 4.5%.
President Trump applauded the figures on his Truth Social platform, claiming "AMERICA IS HOT!" However, a closer look at the numbers reveals that it wasn't as rosy as it seemed. Employers added a robust 212,000 jobs in November, and the unemployment rate was lower at just 4.1%. Inflation, consumer prices, and wage growth have all shown a cooling trend since then.
Experts see the May jobs report as signaling a labor market that exhibits caution in the face of ongoing uncertainty. The ManpowerGroup noted that hiring "momentum slowed across the board," while analysts at Capital Economics described the report as "not as good as it looks." Although the report suggests tariffs have minimal negative impact, experts anticipate that forthcoming inflation readings will reflect businesses raising prices to offset import taxes, which could lead to reduced economic activity and hiring in the future.
Insightful Fact:The Trump administration's tariffs on imports are expected to have a significant impact on employment and the economy. According to simulations, the tariffs could cause the unemployment rate to rise by 0.4 percentage points on average by the end of 2025. Additionally, tariffs are estimated to lead to approximately 456,000 fewer payroll jobs in the U.S. labor market.
- In light of the May job report, experts foresee a labor market exhibiting caution, as demonstrated by the slowing hiring momentum and the overall economic uncertainty.
- Wary investors are concerned that the Federal Reserve may maintain higher interest rates for an extended period due to the steady state of the job market, a concern that could impact stock prices and bond yields.
- The May jobs report, while showing signs of job growth, also reveals a weakening labor force, evidenced by the decrease in the employed workforce-to-total population ratio and a post-pandemic high in the alternative unemployment measure.
- Although President Trump celebrated the May job figures, a closer analysis suggests that they might not be as promising as initially perceived, given the more robust job growth and lower unemployment rate observed in November.
- As the Trump administration continues to impose tariffs on imports, experts predict they will have a substantial impact on the U.S. employment market and economy, potentially causing the unemployment rate to rise by 0.4 percentage points on average and leading to approximately 456,000 fewer payroll jobs by the end of 2025.
- Federal government employment saw a decline of 22,000 roles in May, attributable to administration cuts and the Department of Government Efficiency project spearheaded by tech magnate Elon Musk.
