Hiring slowed but remained sturdy in May as businesses warned of uncertainty tied to President Donald Trump’s on-again, off-again tariff policy, federal government data on Friday showed. The reading exceeded economists’ expectations.
The U.S. added 139,000 jobs in May, according to data from the U.S. Bureau of Labor Statistics. That figure marked solid growth but a slowdown from 177,000 jobs added in the previous month. The unemployment rate stood unchanged at 4.2%, a historically low figure.
Hiring in May registered slightly lower than an average monthly gain of 149,000 over the previous 12 months.
Federal government employment declined by 22,000 jobs in May, bringing total losses in the federal government to 59,000 since January, when Trump established the Department of Government Efficiency, or DOGE. The Elon Musk-led organization has sought to slash federal spending, in part by eliminating some federal jobs.
The fresh data revealed the performance of a key measure of economic health as Trump rolled back some of the “Liberation Day” tariffs imposed a month earlier.
A trade agreement between the U.S. and China in May slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a downturn.
The U.S.-China accord came weeks after the White House paused a large swath of Trump’s “Liberation Day” tariffs targeting dozens of countries. Trump also eased sector-specific tariffs targeting autos and rolled back duties on some goods from Mexico and Canada.
Still, an across-the-board 10% tariff applies to nearly all imports, except for semiconductors, pharmaceuticals and some other items. Those levies come on top of specialized tariffs on steel, aluminum and autos. China, the third-largest U.S. trade partner, faces 30% tariffs.
A slew of major companies as far-flung as Pepsi, Goldman Sachs and Target have warned that they may suffer losses due to uncertainty tied to the on-again, off-again tariffs.
Nationwide retailers like Walmart and Best Buy have also voiced alarm of potential price increases as a result of the levies.
Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper appetites diminish in the face of costly imports. In theory, a slowdown in spending could hammer some companies and trigger layoffs.
So far, however, key measures of the economy have largely defied fears of a downturn.
The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. In recent months, inflation has cooled, reaching its lowest level since 2021.
The Organization for Economic Co-operation and Development, or OECD, this week forecast continued growth for the U.S. economy in 2025 and 2026, albeit at a slower pace than last year.
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