US Job Growth Slows: 139,000 New Positions Added in May – What This Means for the Labor Market

The job market in the U.S. is showing mixed signals. In May, the economy added 139,000 jobs, which is more than expected. However, it’s still a decline from the revised 147,000 jobs added in April. The unemployment rate stayed steady at 4.2%, which is quite low, historically.

Interestingly, job losses are significant in the federal sector. It shed 22,000 jobs in May alone, with a total loss of 59,000 since January. These changes have been driven by budget cuts initiated by both the Trump administration and Elon Musk’s efficiency project in government.

Despite adding jobs, there are signs that the labor market is slowing. The percentage of employed people compared to the total population is at 59.7%, the lowest since the pandemic began. Additionally, another measure of unemployment, which counts those who have stopped looking for work, hit a post-pandemic high of 4.5%.

Data from a private payroll processor, ADP, revealed that job growth has slowed down, marking the weakest month since March 2023. Economists note that this trend often aligns with official data from the Bureau of Labor Statistics (BLS). The slow growth is evident, with fewer jobs added in five of the last seven months.

A recent report from the Institute for Supply Management (ISM) revealed that U.S. service firms saw a decline in activity for the first time in nearly a year, and hiring has cooled off. The Labor Department also reported that jobless claims were higher than expected, reaching levels not seen since October of the previous year.

Mark Zandi, the chief economist at Moody’s Analytics, shared that the economy feels fragile. As inflation rises, consumer spending may decrease, leading to less hiring and potentially more layoffs. A Congressional Budget Office study suggests that Trump’s tariffs could raise inflation by an average of 0.4 percentage points in the coming years.

This can create a cycle where reduced spending leads to even less hiring. Currently, hiring rates resemble those from 2014, during the time of recovery from the Great Recession.

While Trump claims the economy is thriving due to tariffs, there’s pressure to lower interest rates to support businesses and consumers. However, analysts suggest that the Federal Reserve may keep rates high to keep inflation in check. This means consumers might not see relief anytime soon.

For more information about the current job market dynamics, visit the Bureau of Labor Statistics.

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