Job growth was better than expected in May despite heightened economic uncertainty
Economists predicted job growth of 126,000 and for unemployment to remain at 4.2%. This is the third straight month of a 4.2% rate and the 13th straight month at or above 4%.
April's job growth was revised from 177,000 to 147,000, and March's growth was revised from 185,000 to 120,000. That means that there were 95,000 fewer jobs created over those two months than BLS previously reported.
Wage growth continued its consistent year-over-year growth of 3.9% in May. Average hourly earnings increased from $34.89 a year ago to $36.24. Month-over-month wage growth was also slightly better than expected.
Labor force participation cooled from 62.6% in April to 62.4% in May.
Healthcare and leisure and hospitality had high job growth over the month compared to other industries. Employment fell by 8,000 in manufacturing and by 18,000 in professional and business services. There were more cuts to the federal government; employment fell by 22,000 in May, more than the declines in the past few months.
The new data release from the Bureau of Labor Statistics is just one of several recent reports illustrating the much-watched US labor market. The Federal Reserve's Beige Book showed that some businesses are delaying hiring due to economic uncertainty. Separately, the National Federation of Independent Business showed small business optimism has continued to weaken. While insured unemployment claims are still low, they climbed in May.
The back and forth on tariffs, including a 90-day pause with China and higher duties on steel and aluminum, is adding pressure to business decisions. Cuts and deferred resignations within federal government agencies could mean job seekers turn to the private sector or leave the labor force.
"Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies' workforces," Andrew Challenger, senior vice president of the outplacement firm Challenger, Gray & Christmas, said in a report before Friday's news release. Companies are spending less, slowing hiring, and sending layoff notices.
President Donald Trump has argued tariffs will help the US economy, despite some short-term pain for businesses and consumers.
CME FedWatch showed based on market trades an overwhelming chance the Federal Reserve will decide to hold interest rates steady at the next Federal Open Market Committee meeting in mid-June. Like business owners, the Fed is hoping for more clarity on the evolving economy.
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