The May jobs report showed the US labor market remained largely resilient amid President Trump’s new tariff policy.
The US economy added 139,000 nonfarm payrolls in May, more than the 126,000 expected by economists. The unemployment rate held steady at 4.2%.
In April, the US economy added 177,000 jobs while the unemployment rate held flat at 4.2%. Those figures were revised lower on Friday to reflect that the economy added 147,000 jobs that month.
Revisions from March and April showed the US labor market added 95,000 fewer jobs than initially thought.
“We’re seeing a softening in the labor market,” EY chief economist Gregory Daco told Yahoo Finance. “That’s undeniable. But it’s not a retrenchment in the labor market. And that’s what was feared.”
Stocks rallied after the report, with the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) all rising about 1% in early trading.
Average hourly earnings in May rose 0.4% over the last month and 3.9% over the prior year. Economists expected wages to rise 0.3% over the last month and 3.7% over the prior year. Meanwhile, the labor force participation rate fell to 62.4% from 62.6% the month prior.
“The May employment report was mixed but doesn’t alter our assessment of the labor market or the economy,” Oxford Economics chief US economist Ryan Sweet wrote in a research note following the release. “We also remain comfortable with the forecast for the Federal Reserve to wait until December before cutting interest rates as the inflation impact of tariffs is still coming and will be more visible this summer.”
The May jobs report encapsulated the week of May 12, meaning it included the initial reaction to the US-China 90-day tariff pause. Additionally, Trump’s baseline tariffs of 10% on various countries were in effect.
Amid the tariff back-and-forth other signs of slowing in the jobs market have begun to emerge in the data. On Wednesday, ADP data showed the private sector added 37,000 jobs in May, the lowest monthly total in more than two years. Then on Thursday, weekly filings for unemployment benefits hit their highest level since October 2024. Meanwhile, continuing claims hovered near their highest level in nearly four years.
Read more: How jobs, inflation, and the Fed are all related
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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