Employers Add a Solid 139,000 Jobs in May, Though Hiring Slows as Some Potential Weaknesses Appear

Yomiuri Shimbun

a day ago

AP file photo
A help wanted sign is posted in Lansdale, Pa., Friday, April 28, 2023.
WASHINGTON (AP) — 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.
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% from April and 3.9% from a year earlier – a bit higher than forecast.
There were a few signs of potential weakening. Labor Department revisions shaved 95,000 jobs from March and April payrolls. The number of people in the U.S. labor force – those working or looking for work – fell by 625,000 last month, the biggest drop since December 2023. And the percentage of those who had jobs fell last month to 59.7%, the lowest since January 2022.
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.
'The job market is still standing tall even as some of these headwinds start to blow,' said Daniel Zhao, lead economist at the jobs website Glassdoor. 'But ultimately we're all still waiting for the other shoe to drop. It's still much too early for tariff impacts to be a significant drag on the economy.'
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. They didn't.
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% from last year, down almost 43% from 2023, and down a whopping 67% 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. But so far hiring is holding up.
Investors still expect just two cuts by the Fed this year, starting in September. Jim Lebenthal, chief equity strategist at Cerity Partners, said the central bank will likely stay on hold as it waits to see whether the sweeping tariffs that Trump imposed April 2, then delayed until July 9, return in some form. Those duties are also being challenged in court.
'They need to see the effects of the tariffs before they make any moves,' Lebenthal said.
Recent economic reports have sent mixed signals.
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, though jobless claims remain low by historical standards.
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% from last year, down almost 43% from 2023, and a down whopping 67% 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.'
Steel Horse Leather is a Brooklyn company that makes handmade leather bags and imports some of its material and production from China.
Owner Dave Heaton says rapidly evolving tariff rules have made it difficult to manage the business day to day – let alone build on his staff of four. 'With the current volatility, hiring really isn't something at the top of our list, unfortunately,' he said.
Heaton's company has also begun to supplement sea freight with air shipments to secure products in time for the fall and holiday seasons. He's raised prices 10% to 15% on some products to cover higher shipping fees and some of the tariffs, the first price hikes in in three years.
'The real challenge is the uncertainty,' Heaton said. 'It's not just about the price hikes — it's that we can't plan ahead like we used to.'