What To Expect From Friday’s Jobs Report

The job market likely slowed down but kept rolling in May, according to forecasters.

The Bureau of Labor Statistics’ widely watched report Friday is likely to show the U.S. economy added 125,000 jobs in May, a slowdown from the unexpectedly high 177,000 in April, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate is expected to hold steady at 4.2%, the same as the month prior.

Experts have been watching economic data for signs that President Donald Trump’s tariff campaign is hurting job creation and pushing up inflation, but so far neither has happened. A jobs report in line with expectations would indicate the economy has weathered the tariffs and the uncertainty about them, at least so far.

“At present, there are no obvious signs of a meaningful deterioration in the labor market,” Brett Ryan, senior U.S. economist at Deutsche Bank, wrote in a commentary.

The job market has stayed resilient over the past few years despite a series of upheavals, including the post-pandemic surge of inflation, and the Federal Reserve cranking up interest rates in response. The economy has added jobs every month since December 2020. Still, the pace of job creation and the number of job openings have dropped significantly since mid-2022, when workers were in unusually high demand.

Trump’s trade wars could end the job market’s winning streak. Many economists expect consumer prices to rise and employment to suffer more as the summer goes on, and merchants pass on the cost of the tariffs imposed in April to customers. Some forecasters expect the tariffs to hit the economy harder and sooner: economists at Nomura called for only 110,000 jobs to be created in May.

“Lead indicators for the labor market have deteriorated, and risks are skewed to the downside amid broader signs of slowing growth momentum,” Jeremy Schwartz, analyst for Nomura, wrote in a commentary.

The jobs report could be consequential for the Federal Reserve’s monetary policy decisions in the coming months. The Fed has held interest rates steady this year as officials wait to see whether the tariffs will reignite inflation, spur unemployment, or both. A surge of layoffs could pressure the Fed to cut interest rates, which would lower borrowing costs on all kinds of loans, giving a boost to the economy and encouraging hiring.

How much would the job market have to slow down to make the Fed cut interest rates? Monthly job creation in the low 100,000s or high five-figure range likely wouldn’t do it, the Nomura economists said.

“Forward-looking risks to the labor market are skewed to the downside, but with the unemployment rate remaining stable and few signs of widespread layoffs, policymakers are unlikely to become concerned about an imminent deterioration,” Schwartz wrote.