Washington (AFP) – US hiring eased in May but remained resilient, government data showed Friday, in a gradual slowdown amid business uncertainty while scrutiny intensifies over the effects of President Donald Trump’s widespread tariffs. Hiring in the world’s largest economy came in at 139,000 last month, down from a revised 147,000 figure in April, said the Labor Department. The unemployment rate was unchanged at 4.2 percent, while pay gains exceeded expectations at 0.4 percent. The figures indicate that the employment market remains healthy despite jolts to financial markets, supply chains, and consumer sentiment this year as Trump announced successive waves of tariffs. Trump touted the “great job numbers” on his Truth Social platform.
But there appears to be softening. Taken together, job growth in March and April was revised lower by 95,000, Friday’s report said. Shortly after its publication, Trump urged Federal Reserve Chair Jerome Powell to go for a “full point” rate cut, calling Fed chief “a disaster” and again applying political pressure on the independent central bank. But Fed officials are taking a cautious approach as they monitor the tariffs’ impact on inflation. Trump has imposed a 10 percent levy on most trading partners and unveiled higher rates for dozens of economies, but experts say their effects take time to filter through. This is partly because of the president’s on-again, off-again approach to the trade war. His higher blanket tariff rates, although announced in April, were swiftly halted until early July, allowing room for negotiations. Trump’s tit-for-tat escalation with China brought both sides’ levies on each other’s products to triple digits too in April, a level effectively acting as a trade embargo. But the countries reached a deal to temporarily lower duties in May.
– ‘Tough summer’ – For now, economists are keeping tabs on signals that US employers might be pulling back on hiring. “This is an ‘abundance of caution economy’ where businesses are only filling critical positions and job seekers, especially recent graduates, are struggling to find employment,” said Heather Long, chief economist at the Navy Federal Credit Union. She noted that nearly half the job gains were in health care, while the federal government continues to lose workers. Federal government employment was down by 59,000 since January. “A recession does not look imminent, but it will be a tough summer for anyone looking for full-time work,” Long said in a note. Economist Samuel Tombs of Pantheon Macroeconomics said the labor market was “cracking, but not crumbling yet.”
While the market is slowing, the pace of cooling remains too gradual for the Fed to reduce interest rates at upcoming meetings. Officials have been awaiting more clarity on how much Trump’s new tariffs might lift inflation. Tombs warned that revisions to May’s employment data could “reveal a sharper slowdown.” On Wednesday, data from payroll firm ADP showed that private sector employment cooled to 37,000 in May, down from 60,000 in the prior month and marking its slowest rate since 2023. Initial jobless claims picked up in the week ending May 31, with economists warning that this could be a sign of a weakening labor market in response to Trump’s tariffs and the resulting uncertainty. Anecdotal data such as the Fed’s beige book survey of economic conditions and recent surveys of businesses have also indicated the levies are causing many firms to pause investment and hiring. All these mean that such effects could soon show up in government employment numbers.
“Certainly, employment growth is going to slow down over the next few months,” said Dan North, senior economist at Allianz Trade North America. “We just haven’t seen the full effect of the tariffs, and we probably won’t for a few more months, especially given that they’re so choppy, on and off,” North told AFP.
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