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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
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6 min read
The US economy added 139,000 jobs in May, slightly more than expected
By Alicia Wallace, CNN
Updated:
12:13 PM EDT, Fri June 6, 2025
Source: CNN
The long-resilient labor market slowed down a little in May, adding
139,000 jobs, according to Bureau of Labor Statistics data released
Friday.
Last month’s job gains, which came in slightly more than expected,
marked , which was downwardly revised to 147,000.
The unemployment rate held steady at 4.2%, and wage gains continued to
outpace inflation.
Those two numbers on their own — the monthly payroll gain and the
unemployment rate — indicate that the US labor market is cooling and
not collapsing. However, the guts of the report indicate that fissures
may be spreading, some economists warn.
“I don’t want to play Debbie Downer by just reading the headlines
and concluding nothing to worry about,” Gregory Daco,
EY-Parthenon’s chief economist, told CNN. “In my opinion, we are
starting to see an acceleration of labor market slowdown.”
Economists were expecting the economy to have added 130,000 jobs last
month and that the unemployment rate held at 4.2%, according to
FactSet consensus estimates.
Friday’s report painted a picture of a “steady but cautious”
labor market in the face of swelling economic uncertainty, said Ger
Doyle, regional president for North America at employment firm
ManpowerGroup.
President Donald Trump’s sweeping policy moves, especially a whipsaw
approach to massive import tariffs, have , rattled markets and clouded
businesses’ lines of sight.
“This is not a freeze, but a temporary chill,” Doyle wrote in
commentary Friday. “Employees are staying put, employers are holding
steady, and everyone is waiting for clearer signs.”
While the pace of job growth remains fairly solid, this year’s gains
were even softer than initially thought, Friday’s report showed.
March’s and April’s gains were revised down by a combined 95,000
jobs, resulting in employment increasing by an average monthly clip of
nearly 124,000 jobs this year.
That may be above the 100,000 threshold (below which would be an
indicator of potential weakness), but, excluding recession years,
it’s the for January through May in the past 30 years, an analysis of
BLS data shows.
‘Waiting for the other shoe to drop’
In the years following the economy-upheaving pandemic, job growth has
slowed, but it has not collapsed. The gains have to fuel consumer
spending and put the economy on track for a “soft landing” of
reining in inflation without triggering a recession.
May’s jobs report marks the 53rd consecutive month that the US
economy has added jobs, the second-longest streak of employment
expansion on record (behind the post-Great Recession/pre-Covid market
of late-2010 to early 2020), BLS data shows.
However, economists have warned that the Trump administration’s and
other actions — including drastic cutbacks to federal spending, , and
reductions in immigration — not only threaten those soft landing odds
but also heighten recession risks.
“The May jobs report still has everyone waiting for the other shoe to
drop,” Daniel Zhao, Glassdoor’s lead economist, wrote Friday.
“This report shows the job market standing tall, but as economic
headwinds stack up cumulatively, it’s only a matter of time before
the job market starts straining against those headwinds.”
Not knowing the size and breadth of tariffs (but knowing they very well
might change), for example, has hindered businesses’ abilities to
operate and plan: They don’t know what their costs will be in three
months, let alone three days from now; and it’s even more unclear
whether consumers will keep spending.
Outlooks have quickly become opaque.
Scores of the largest public US companies for future earnings,
temporarily blinding analysts and investors. And small businesses that
have little room for error have been .
Although layoffs remain low, and , slowing the all-important
“churn” behind a healthy labor market.
“The labor market is revealing fragility,” Diane Swonk, chief
economist at KPMG, told CNN in an interview. “There’s no margin for
error when you’ve got a low pace of hiring, a low pace of quits.”
DOGE effects spread
Friday’s jobs report showed that opportunities dwindled for many
workers. Almost the entirety of the month’s employment gains (nearly
91%) was concentrated in just two sectors: health care and social
assistance, and leisure and hospitality.
Half of all major industries added jobs in May (or lost jobs, if
one’s a glass-half-empty type of person), according to the BLS’
employment “diffusion index.” Across manufacturing, only 41.7% of
industries added jobs.
“When manufacturing is losing jobs and the diffusion index suggests
those losses are broad, it’s more indicative of an industry-wide
phenomenon, and could warrant concern for the broader economy,”
Elizabeth Renter, NerdWallet’s senior economist, wrote in a note
Friday.
Overall last month, the lost 8,000 jobs.
The largest job losses in May, however, occurred in the federal
government, which saw its employment bloodletting worsen due to the
Trump administration’s efforts to slash the federal workforce and gut
agencies and spending.
The federal government has posted job losses for four consecutive
months, dropping 13,000 jobs in February, 11,000 in March, 13,000 in
April, and another 22,000 in May.
There’s more to come on that front. The bulk of the losses to date
likely reflect early retirements versus Department of Government
Efficiency-driven layoffs, Swonk said. The losses from the latter could
be spread out over many months to come: Not all federal workers were
laid off immediately and other actions are being challenged in court.
The federal workforce represents a tiny share of overall employment;
however, Trump’s federal cuts appear to causing collateral damage in
the private sector, Swonk said, noting job losses at scientific labs.
BLS data shows that scientific, research and development services lost
3,900 jobs in May, which followed a 4,400-job loss in April. On a
year-to-date basis, that industry is running in the red for the first
time since the Covid-19 pandemic.
A ‘good enough’ report to keep the Fed on hold
The BLS’ monthly snapshot of the labor market is composed of two
surveys: One of businesses (which measures employment, hours and
earnings), and one of households (which provides demographic data and
feeds into the all-important unemployment rate).
While the household survey tends to have more volatility, May’s
readings from that particular wing of the report rang more alarm bells
than usual.
The unemployment rate didn’t budge, but more workers left the labor
market. The labor participation rate fell by 0.2 percentage points to
62.4%. And while the labor force losses were broad-based, they were
more heavily concentrated in women over the age of 55 and men of prime
working age (25 to 54), Swonk said.
The household survey also indicated that more people who were not
working were instead in school or training.
“That tends to be something that happens when the labor market
weakens,” she said.
But for now, the labor market is “good enough” and “strong
enough” to keep the Federal Reserve in its holding pattern as higher
tariffs have reignited concerns about inflation, Wells Fargo economists
wrote in a note to clients Friday.
Key inflation data is due out next week with the release of the
Consumer Price Index and Producer Price Index on Wednesday and
Thursday, respectively.
“That said, with both the soft and hard data on the labor market
showing employment conditions softening, we still expect [Fed
policymakers] to be cutting later this year,” they wrote.
Trump, however, reiterated Friday that he’d like to see interest
rates go down sooner than later. In posts on his Truth Social site, the
Fed’s current benchmark rate is “costing our country a fortune”
and that “borrowing costs should be MUCH LOWER!!!”
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