Trade war: US hiring slows but employment resilient

Sky News

06-06-2025

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The US economy saw a slowdown in hiring but no leap in unemployment last month as the impact of Donald Trump's trade war continues to play out.
Official data, which strips out the effects of seasonal workers, showed 139,000 net new jobs were created during May.
Market analysts and economists had expected a figure of 130,000 - down on the 147,000 for April.
The unemployment rate remained at 4.2% and hourly pay rates rose.
The figures were released as the health of the US economy continues to attract close scrutiny amid continuing fears of a recession risk in the world's largest economy due to the effects of Donald Trump's trade war.
Unlike most developed economies, such a downturn is not determined by two consecutive quarters of negative growth, but by a committee of respected economists.
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It's known as the Business Cycle Dating Committee.
It uses employment data, as well as official growth figures, to rule on the status of the economy.
The threat of tariffs, and early salvoes of, the Trump administration's protectionist agenda were blamed for a sharp slowdown in growth over the first three months of the year.
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Economists have found it hard to predict official data due to the on-off, and often chaotic, nature of tariff implementation.
As such, all official figures are keenly awaited for news of the trade war's impact on the domestic economy.
Other data this week showed a record 20% plunge in US imports during April.
Next week sees the release of inflation figures - the best measure of whether import duty price increases are working their way through the supply chain and harming the spending power of businesses and consumers.
It's a key piece of information for the US central bank.
It has paused interest rate cuts, to the fury of the president, over trade war uncertainty.
A forecast by the Paris-based OECD this week highlighted the chance of consumer price inflation rising above 4% later in the year.
It currently stands at an annual rate of 2.3%.
Fears of a US recession and trade war uncertainty have combined most recently with increasing market concerns about the sustainability of US debt, given Mr Trump's tax cut and spending plans.
US stock markets are largely flat on the year while the dollar index, which measures the greenback against six other major currencies, is down 9% this year and on course for its worst annual performance since 2017.
European stocks entered positive territory in a small nod to the employment data while US futures showed a similar trend.
The dollar rose slightly.
The reaction was likely muted because the data was well within expectations and seen as positive.
Commenting on the figures Nicholas Hyett, investment manager at Wealth Club, said: "The US labour market has shrugged off the tariff uncertainty that rocked global stock and bond markets in April and May.
"While the Federal government has continued to shed a small number of jobs, the wider economy has more than made up the difference, with the US adding slightly more jobs than expected in May. Wage growth also came in higher than expected - suggesting the economy is in rude health.
"That will be taken as vindication by the Trump administration - which has been clear that the tariffs are aimed squarely at supporting Main Street rather than pleasing Wall Street.
"Less positive from the White Houses' point of view is that a strong economy and rising wages gives the Federal Reserve less reason to cut interest rates - pushing yields a touch higher and making the fiscal splurge built into Trump's "Big Beautiful Bill" that bit more expensive.