U.S. adds 139K new jobs in May, but numbers down from April

Global News

19 hours ago

U.S. employers slowed hiring last month, but still added a solid 139,000 jobs amid uncertainty over President Donald Trump's trade wars.
Hiring fell from a revised 147,000 in April, the Department of Labor said Friday. The job gains last month were above the 130,000 that economists had forecast, but revisions shaved 95,000 jobs from March and April payrolls.
The unemployment rate stayed at a low 4.2 per cent.
Healthcare companies added 62,000 jobs and bars and restaurants 30,000. The federal government shed 22,000 jobs, however, the most since November 2020, as Trump's job cuts and hiring freeze had an impact. And factories lost 8,000 jobs last month.
Average hourly wages rose 0.4 per cent from April and 3.9 per cent from a year earlier – a bit higher than forecast.
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Trump's aggressive and unpredictable policies – especially his sweeping taxes on imports – have muddied the outlook for the economy and the job market and raised fears that the American economy could be headed toward recession. But so far the damage hasn't shown up clearly in government economic data.
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BIV: What sectors show gains in April job numbers?
'Even during peak trade uncertainty, the labor market remained fairly solid,' Seema Shah, chief global strategist at Principal Asset Management, wrote in a commentary. 'Payrolls are still robust territory and, although there are clearly cracks forming and employment data is likely to show clearer signs of softening towards the end of summer, this is not a labor market which is starting to fall apart at the seams.'
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Economists expect Trump's policies will have a toll on America's economy, the world's largest. His massive taxes on imports — tariffs — are expected to raise costs for U.S. companies that buy raw materials, equipment and components from overseas and force them to cut back hiring or even lay off workers. Billionaire Elon Musk's Department of Government Efficiency (DOGE) has slashed federal workers and cancelled government contracts. Trump's crackdown on illegal immigration is expected to make it harder for businesses to find enough workers.
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For the most part, though, any widespread damage has yet to appear in the government's economic data.
The U.S. economy and job market have proven surprisingly resilient in recent years. When the inflation fighters at the Federal Reserve raised their benchmark interest rate 11 times in 2022 and 2023, the higher borrowing costs were widely expected to tip the United States into a recession, which they did not.
Still, the job market has clearly decelerated. So far this year, American employers have added an average of less than 124,000 a month. That is down 26 per cent from last year, down almost 43 per cent from 2023, and a down whopping 67 per cent compared with 2022.
The modest job gains and steady unemployment rate are likely to keep the Fed on the sidelines for at least the next few months, economists said. The central bank Fed has kept its key short-term interest rate unchanged this year, after cutting it three times last year.
Fed chair Jerome Powell and most other Fed policymakers have voiced concern that Trump's tariffs could push up inflation later this year, which they would seek to counter by raising rates. The Fed is only likely to accelerate interest rate cuts if the job market sharply deteriorates, which didn't happen last month.
Recent economic reports have sent mixed signals.
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1:44
Canada's jobless rate ticks up as Trump's tariffs cause cracks in labour market
The Labor Department reported Tuesday that U.S. job openings rose unexpectedly to 7.4 million in April — seemingly a good sign. But the same report showed that layoffs ticked up and the number of Americans quitting their jobs fell, a sign they were less confident they could find something better elsewhere.
Surveys by the Institute for Supply Management, a trade group of purchasing managers, found that both American manufacturing and services businesses were contracting last month.
And the number of Americans applying for unemployment benefits rose last week to the highest level in eight months.
Jobless claims — a proxy for layoffs — still remain low by historical standards, suggesting that employers are reluctant to cut staff despite uncertainty over Trump's policies. They likely remember how hard it was to bring people back from the massive but short-lived layoffs of the 2020 COVID-19 recession as the U.S. economy bounced back with unexpected strength.
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Still, the job market has clearly decelerated. So far this year, American employers have added an average of less than 124,000 a month. That is down 26 per cent from last year, down almost 43 per cent from 2023, and a down whopping 67 per cent compared with 2022.
Trump's tariffs — and the erratic way he rolls them out, suspends them and conjures up new ones — have already buffeted the economy.
'Employers have been hoarding labor in the face of massive corrosive uncertainty,' said Carl Weinberg, chief economist at High Frequency Economics. 'We believe firms have been reluctant to lay off workers until they saw the extent of the Trump tariffs. Now that the tariffs are out in the open, we believe most firms see the writing on the wall and will start workforce reductions right now.''
America's gross domestic product — the nation's output of goods and services — fell at a 0.2 per cent annual pace from January through March this year.
A surge of imports shaved five percentage points off growth during the first quarter as companies rushed to bring in foreign products ahead of Trump's tariffs. Imports plunged by a record 16% in April as Trump's levies took effect. The drop in foreign goods could mean fewer jobs at the warehouses that store them and the trucking companies that haul them around, wrote Michael Madowitz, an economist at the left-leaning Roosevelt Institute.
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—AP Economics Writer Christopher Rugaber contributed to this story.