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U.S. pay growth slowed gently in May as employers added 139,000 jobs amid uncertainty over President Trump’s sweeping import duties, federal layoffs and immigration crackdown.
The Labor Bureau said Friday.
Before the report was released, an economist surveyed by Bloomberg estimated that 125,000 jobs had been added last month.
Job acquisitions in March and April have been revised at a total of 95,000, depicting a weaker labor market than was believed in late winter and early spring. The total in March was downgraded from 185,000 to 120,000, and in April it was downgraded from 177,000 to 147,000.
“Employment benefits are being eased… Many companies are reluctant to maintain their retention patterns and hire new workers amid growing uncertainty about the impact of tariff policies on economic growth,” wrote Kathy Boss Jansick, chief economist across the country, in a memo to clients. “At the same time, they’re not firing workers on a massive basis.”
Which industry currently employs the most?
Over the past few years, Healthcare, a trusted employment generator, has once again brought employment benefits at 62,000. Leisure and Hospitality added 48,000.
However, the scope of job creation has narrowed, perhaps indicating a wider slowdown in the future. Professional and business services emitted 18,000 jobs, while retailers lost 6,500 people and manufacturing.
The federal government has cut 22,000 positions amid the widespread layoffs of the Trump administration, cutting 59,000 since January.
Is wages increasing in the US?
Average hourly revenue rose 15 cents to $36.24, from 3.8% to 3.9% per year.
Wage growth has slowed in recent months and peaked at 5.9% in March 2022 due to a pandemic-related workforce shortage, Oxford Economics said, in close align with the Federal Reserve’s 2% inflation target.
Will interest rates fall in 2025?
A solid job acquisition in May will do nothing to reduce the key rates with the Fed at the mid-June meeting.
Since cutting interest rates by percentage late last year, Fed officials say they will likely remain on hold until they determine whether Trump’s tariffs will drive inflation or do more harm by hobling the economy.
May employment may have prompted authorities to start thinking about rate cuts soon, at least, especially if another soft reading in June continues.
The Fed keeps them high for longer to combat inflation. Lower the rate and delve into the economy from the recession.
But Trump’s immigration crackdown could complicate the Fed’s mission.
Last month, a sharp decline in employment in the Worker’s household survey was offset by a significant decline in the workforce (a pool of Americans working or looking for employment). This could prevent unemployment from rising and make it difficult for the Fed to go lower, despite similar dynamics weakening employment growth in the coming months, economists said.
Is the job market good or bad right now?
The labor market has slowed, but it has been well endured despite the hurdles brought by Trump’s economic policies. This year, the average increase in employment per month has been down from 168,000 in 2024.
Trump’s trade strategy is at the heart of the projected downshift. He suspended double-digit high tariffs that he slapped in dozens of countries in April, and agreed to reduce taxes on Chinese imports from 145% to a still standardized 30% in May. China agreed to a much similar concession.
However, this move is further in which the US deals with China and other countries. Additionally, the 25% tariff remains in effect on all imported cars and many goods from Canada and Mexico. This week, Trump hiked the fees for importing steel and aluminum from 25% to 50%.
And last month, trade courts defeated many of Trump’s tariffs, which they were in effect during the appeal, extending corporate uncertainty.
Economists expect an obligation to re-ignite inflation and weaken consumer spending within a month or two. Costs also increased business uncertainty and reduced employment and investment.
How many federal employees are fired?
The Trump administration’s government efficiency cuts federal employment as many as 120,000, but many workers are on administrative leave, leaving them with their US salaries pending trial, Morgan Stanley said in the report. Others who were on paid leave or receiving retirement benefits were also counted as being employed.
Still, the cuts began filtering to the number of jobs highlighted by 22,000 federal unemployment in May and 59,000 job losses since January.
Are immigrants still coming to America?
In addition to strengthening enforcement at the tropical border, the administration has refused to cancel or renew work permits and other protections for hundreds of thousands of migrants, Ey-Parthenon economist Lydia Boussour wrote in a note to his client. That would probably mean a smaller supply of labor that would further constrain employment, especially in industries such as construction and hospitality.
However, although employment has generally slowed down, other economists thought employment growth would remain robust last month, as they are unhappy with the labor shortage during the pandemic. The claims of the first unemployed, a reliable gauge for layoffs, have risen recently, but remained historically low. Both Capital Economics and Barclays projected a 150,000 employment increase in May.
But by the end of the year, Barclays believes tariffs, federal layoffs and immigrant curbs will reduce the average monthly average employment increase to around 75,000.
(This story has been updated to add new information.)
