Employers added 139,000 jobs in May as labor market remains steady
Employers across the U.S. added 139,000 jobs in May, new federal shows, a sign the labor market remains steady despite economic headwinds from tariffs.
The numbers
Payroll gains in May exceeded economists' consensus forecast of 130,000. Job growth over the last 12 months has averaged 156,800 per month, according to financial data firm FactSet.
The nation's unemployment rate held steady at 4.2% for the third month in a row, according to the Labor Department. That matched forecasts by economists polled by FactSet.
Although the government's latest employment report topped expectations, job growth was slightly weaker in May compared with previous months. The Labor Department on Friday revised April payroll gains down to 147,000, from an initial estimate of 177,000
Stocks rose on Friday following the better-than-expected report. The S&P 500 was up 64 points, or 1.1% as of 10:57 a.m. EST. The Dow Jones Industrial Average climbed 464 points, or 1.1% and the Nasdaq Composite rose 1.3%.
What it means
While job growth in May was modestly weaker than in previous months, the data suggests the job market is holding up
despite concerns about the impact of higher U.S. import tariffs. Still, economists warn the economy could slow in the coming months.
The jobs numbers reflect a labor market that is "steady but cautious in the face of ongoing uncertainty," Ger Doyle, regional president at global workforce solutions company ManpowerGroup, said in a report.
Health care companies, along with the leisure and hospitality industry, saw the largest gains in employment last month, adding 62,000 and 48,000 jobs, respectively. Federal employment declined 22,000 in May and is down 59,000 since January, according to the Labor Department.
Other employment data released this week hinted at a potential slowdown in the labor market, with firms pulling back on hiring and announcing layoffs amid tariff-induced economic uncertainty. Unemployment claims last week ticked up to their highest level in eight months, Labor Department data shows. The biggest increase in unemployment claims was in Kentucky, followed by the District of Columbia and Nebraska, according to a from WalletHub.
However, the latest jobs report suggests the labor market isn't about to crumble, let alone point to an imminent recession, analysts said.
"Jobs came in slightly better than expected, removing some worries after the very cool ADP report on Wednesday this week," said Brian Mulberry, client portfolio manager at Zacks Investment Management, in a note.
What experts are saying
Some analysts caution that despite the better-than-expected numbers, there may still be trouble up ahead for the economy.
"Investors will breathe a sigh of relief at the 139K figure, but the details of the release suggest that growth storm clouds are darkening," wrote Adam Crisafulli, head of Vital Knowledge, in a research note.
For borrowers, the solid job gains and steady unemployment rate are likely to keep the Federal Reserve on the sidelines for at least the next few months, economists said. The Fed is scheduled to meet next June 17-18. The central bank 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 interest rates.
"In our view, the labor market is not showing the type of weakness that the Fed would need to see in order to consider cutting rates," at its June meeting, Brian Rose, senior U.S. economist at UBS Global Wealth Management, told investors in a client note. "We expect to see further softening in the second half of 2025 as tariffs and other policy measures weigh more heavily on the economy, leading the Fed to start cutting rates in September."
