US jobs market slows down as businesses cope with Trump trade war uncertainty
The US economy added 139,000 jobs in May, a slowdown compared with last month as American businesses cope with uncertainty around Donald Trump's continuing trade war.
After signs of a strong labor market in April – which was largely seen as resiliency against teetering trade policy from the White House – May saw a drop in new jobs added to the labor market, according to new data from the Bureau of Labor Statistics. The unemployment rate remained steady at 4.2%, unchanged from last month.
Economists expected a downward slump after data earlier in the week suggested a cooling job market. Payroll firm ADP reported that private-sector payrolls increased by just 37,000 in May, the lowest gain in more than two years.
'After a strong start to the year, hiring is losing momentum,' said Nela Richardson, chief economist at ADP, in a statement.
The Institute for Supply Management also released its latest purchasing mangers' index figure, which measures the general landscape for manufacturers and showed a reading of 49.9 in April – the lowest since June 2024.
In the most recent results of the University of Michigan's survey of consumers, released at the end of May, consumer sentiment had stayed relatively stable from April to May, with the caveat that April's reading was the lowest drop in consumer sentiment since 1990.
The impact of Trump's trade war has yet to be seen in inflation readings. In April, the annual inflation rate was at 2.3%, a slight decrease from March, though economists said that the impact of Trump's tariffs will be gradual and likely will not impact data until the summer.
Investors are paying close attention to ongoing trade talks between the Chinese president Xi Jinping and Trump, after the White House and Beijing said that trade talks between the two countries had broken down.
On Thursday, Trump told reporters that he had a 'very positive' phone call with Xi. Last month, Trump decreased tariffs on Chinese imports from 145% to 30%, while China decreased its tariffs on American goods from 125% down to 10%.
Also last month, a federal trade court briefly blocked Trump's tariffs against China and other countries, including Canada and Mexico, along with his 10% universal baseline tariff, saying that Trump overstepped his executive authority. Less than 24 hours after that ruling, an appeals court overruled the trade court, reinstating Trump's tariffs.
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