May jobs report shows 139,000 jobs were added last month
Job gains for March and April were revised down by a combined 95,000, portraying a weaker labor market that believed in late winter and early spring. March's total was downgraded from 185,000 to 120,000 and April's, from 177,000 to 147,000.
Is the job market good or bad right now?
The labor market has held up remarkably well despite the hurdles posed by Trump's economic policies, with employment gains averaging well over 100,000 a month so far this year. But many forecasters reckoned a more pronounced hiring slowdown took shape in May and would intensify in the months ahead.
Trump's trade strategy lies at the center of the projected downshift. He paused the high double-digit tariffs he slapped on dozens of countries in April and in May agreed to slash levies on Chinese imports from 145% to a still-elevated 30%. China agreed to broadly similar concessions.
But the moves hinge on further U.S. deals with China and other countries. And 25% tariffs remain in effect on all imported cars and many goods from Canada and Mexico. This week, Trump hiked fees on steel and aluminum imports to 50% from 25%.
And while a trade court last month struck down many of Trump's tariffs, they remain in effect during an appeal, prolonging the uncertainty for businesses.
Economists expect the duties to reignite inflation within a month or two and dampen consumer spending. The costs also have heightened business uncertainty, curtailing hiring and investment.
How many federal employees are laid off?
The Trump administration's Department of Government Efficiency has cut as many as 120,000 federal jobs but many workers have been placed on administrative leave, leaving them on U.S. payrolls pending court cases, Morgan Stanley said in a report.
Still, the reductions have started to filter into the jobs numbers. Goldman Sachs estimates federal employment declined by a relatively modest 10,000 in May, adding to the 26,000 government workers that Capital Economics says already have been chopped since February.
Are there still immigrants coming to America?
Besides toughening enforcement at the southern border, the administration has canceled or declined to renew work permits and other protections for hundreds of thousands of migrants, economist Lydia Boussour of EY-Parthenon wrote in a note to clients. That will likely mean a smaller labor supply that further constrains hiring, especially in industries such as construction and hospitality, she said.
Some calendar quirks also could have suppressed employment last month. For technical reasons, a late Easter likely boosted payrolls in April but heralds a lower tally for May as staffing levels returned to normal, Morgan Stanley said.
Yet while hiring generally has slowed, other economists figured job growth remained sturdy last month as companies frustrated by labor shortages during the pandemic continued to curtail layoffs. Capital Economics and Barclays both predicted 150,000 jobs gains for May.
By the end of the year, however, Barclays believes tariffs, federal layoffs and immigration curbs will slow average monthly job gains to about 75,000.
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