The U.S. economy added more jobs than expected in May, although previous months’ figures were revised downward, as investors continue to assess the broader effects of President Donald Trump’s aggressive tariff policies on economic growth.
According to data released Friday by the Labor Department, nonfarm payrolls increased by 139,000 in May, down from April’s revised total of 147,000, but still above the 126,000 forecast by economists. April’s initial reading of 177,000 was revised lower by 30,000, while March’s figure was also cut by 65,000 to 120,000.
Federal government employment dropped by 22,000, reflecting the Trump administration’s continued effort to shrink the size of the federal workforce. Since Trump’s return to office in January, public sector jobs have fallen by 59,000.
Job gains were strongest in sectors like health care, hospitality, and social assistance, according to the Bureau of Labor Statistics (BLS).
The unemployment rate remained steady at 4.2%, in line with expectations, while average hourly earnings rose by 0.4%, up from a 0.2% gain in the prior month—suggesting wage growth is picking up modestly.
Earlier this week, separate data showed that private-sector hiring came in weaker than forecast in May, signaling a possible cooling in the labor market amid growing concerns over the economic impact of U.S. trade policy. However, analysts cautioned that private payrolls data don’t always align closely with the official BLS report.
Additionally, while job openings increased in April, so did layoffs, indicating that labor demand may be softening despite an otherwise resilient job market.
Leading up to Friday’s jobs report, most analysts expected the Federal Reserve to hold interest rates steady at its upcoming June policy meeting. The latest data appears to have solidified that expectation, with rate cuts unlikely before September, according to the CME FedWatch Tool.
Kansas City Fed President Jeff Schmid also voiced concerns this week about the inflationary risks tied to Trump’s broad tariff strategy. His remarks reinforced expectations that the Fed will keep its benchmark interest rate within the current 4.25%–4.50% range, potentially extending that stance longer than previously anticipated.
