Labor Market Stayed Resilient In May, Adding 139,000 Jobs

Tariff-related disruptions weren’t serious enough to drag the job market into distress, at least not in May.

U.S. employers added 139,000 jobs in May, down from 147,000 in April, the Bureau of Labor Statistics said Friday. That was more than the 125,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate stayed at 4.2%, the same as in April, remaining in the 4%-4.2% range it’s stayed since May 2024.

The data showed employers have remained reluctant to lay off workers, even as hiring has slowed significantly from its breakneck pace of the post-pandemic years. Labor experts expect the job market to start to show cracks in the coming months as uncertainty about tariffs has made companies more reluctant to hire workers, according to recent surveys. But the job market has stayed afloat so far.

“Stronger than expected jobs growth and stable unemployment underlines the resilience of the U.S. labor market in the face of recent shocks,” Lindsay Rosner, head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management, wrote in a commentary.

Stock futures jumped in the minutes after the report was released Friday morning. Investors had been nervous about the jobs report on Thursday, after reports on private payrolls and layoffs fueled fears that tariffs were already affecting the labor market. Friday’s official government report was a relief, said Adam Hetts, Global Head of Multi-Asset at Janus Henderson Investors.

“Good news is good news today, although tariff uncertainty remains, making subsequent hard data releases over the summer extremely important for clarity on the post-Liberation Day economy,” Hetts wrote.

Outlook For The Fed

The lack of red flags about employment could encourage officials at the Federal Reserve to maintain their patient approach to rate cuts.

Policymakers at the Fed have held the central bank’s benchmark interest rate at a higher-than-usual level this year to keep borrowing costs on all kinds of loans elevated and smother inflation. The Fed is mandated to keep inflation low and employment high, and could lower interest rates to boost the economy if the job market starts to falter.

Fed Chair Jerome Powell and other members of the Fed’s policy committee have said they are waiting to see whether President Donald Trump’s trade wars will boost inflation, cause a wave of unemployment, or both. So far, they have done neither, and the solid job market data could give them breathing room to stay on the fence for longer.

“With the Fed laser-focused on managing the risks to the inflation side of its mandate, today’s stronger-than-expected jobs report will do little to alter its patient approach,” Rosner wrote. “We expect the Fed to remain on hold at this month’s meeting and think a softening in the labor market data is likely required for the Fed to continue its easing cycle.”