In a sign of slowing economic momentum, U.S. employers added 139,000 jobs in the past month, a decrease from the revised figure of 147,000 in April. This hiring trend, reported by the Department of Labor, nonetheless exceeded economists’ expectations of 130,000 job gains. However, revisions have adjusted previous payroll figures downward by a substantial 95,000 jobs for the months of March and April.
The unemployment rate remains at a low 4.2% despite these changes. Sectors such as healthcare contributed significantly to job growth, adding 62,000 positions, while the restaurant and bar industry followed with an addition of 30,000 jobs. Conversely, the federal government faced a notable reduction, shedding 22,000 jobs—the highest number since November 2020—due to President Trump’s job cuts and a hiring freeze. Manufacturing showed distress as it lost 8,000 jobs in the same period.
In terms of wages, average hourly earnings saw an increase of 0.4% from April and a 3.9% rise year-over-year, slightly surpassing forecasts. As President Trump’s trade policies, particularly high tariffs on imports, cast shadows over the economy, the impact on the job market has become a focal point of concern. Experts warn that these aggressive and often unpredictable policies are potentially steering the nation towards an economic downturn.
Nonetheless, recent economic indicators suggest that the labor market has held relatively firm, according to Seema Shah, chief global strategist at Principal Asset Management. She noted, “Even during peak trade uncertainty, the labor market remained fairly solid. Payrolls are still robust territory… this is not a labor market which is starting to fall apart at the seams.”
The potential ramifications of Trump’s policies could involve increased costs for U.S. companies sourcing materials from abroad, leading to reduced hiring or layoffs. Adding to the complexity, Elon Musk’s Department of Government Efficiency (DOGE) has implemented significant job cuts and cancelled government contracts that often provide employment opportunities. In conjunction, Trump’s immigration policies may also heighten labor shortages as businesses struggle to find workers.
Despite these challenges, widespread adverse impacts have not yet been reflected in government employment data. The American economy has shown unexpected resilience in recent years. Even in the face of rising interest rates by the Federal Reserve, which raised them 11 times from 2022 to 2023, predictions of a recession have not yet materialized.
However, it is evident that the job market growth is tapering off as employers added an average of fewer than 124,000 jobs per month this year. This figure represents a 26% decline from the previous year, down almost 43% from 2023, and a staggering 67% drop compared to 2022. The combination of modest job gains and a stable unemployment rate is expected to keep the Federal Reserve from making abrupt changes to interest rates for the foreseeable future.
Although the Fed has maintained the key short-term interest rate unchanged this year, there are concerns among policymakers about how tariffs could fuel inflation later. Economists suggest that the Fed will only consider accelerating interest rate cuts if job market conditions deteriorate significantly—something that was not evident in last month’s data.
Other mixed economic signals have recently emerged, as reported by the Labor Department earlier this week. Job openings unexpectedly rose to 7.4 million in April, indicating potential strength in labor demand. However, this report also revealed an uptick in layoffs and a decline in the number of Americans quitting their jobs, highlighting a lack of confidence in securing better employment opportunities elsewhere.
Further complicating the landscape, surveys conducted by the Institute for Supply Management found that both manufacturing and service sectors contracted last month. Additionally, the newest figures show that applications for unemployment benefits have risen to the highest level recorded in eight months. This increase in jobless claims—often seen as a proxy for layoffs—remains low compared to historical standards, suggesting that businesses may be hesitating to trim their workforces amid ongoing uncertainties. Employers are likely recalling the struggles of rehiring quickly after the rapid job losses experienced during the COVID-19 recession.
While the overall economy has been robust, signs of a decelerating job market are undeniable. Job growth this year has been drastically overshadowed compared to previous years, and the unpredictability of Trump’s tariffs continues to exert pressure on the market. Carl Weinberg, chief economist at High Frequency Economics, remarked, “Employers have been hoarding labor in the face of massive corrosive uncertainty. Now that the tariffs are out in the open, we believe most firms see the writing on the wall and will start workforce reductions right now.”
The U.S. gross domestic product has shown troubling signs as well, contracting at an annual pace of 0.2% from January through March. Companies hurried to import goods before tariffs were imposed, which contributed to a 5 percentage point reduction in growth during the first quarter. However, with imports plummeting by a historic 16% in April, the challenges faced by logistics and warehousing sectors may indicate future job reductions in these areas.
In conclusion, while the job market has shown resilience amidst complex economic challenges, the evolving scenario warrants close monitoring as firms navigate the uncertainties introduced by current policies.
image source from：https://www.pbs.org/newshour/economy/hiring-slows-in-u-s-amid-uncertainty-over-trumps-trade-wars
