America’s employment situation managed to hurdle a low bar for yet another month as May job creation managed to beat expectations but slid below April’s revised total.
The Labor Department reported Friday that nonfarm payrolls grew by 139,000 in May—ahead of economists’ estimates for 125,000 jobs created but falling under April’s 147,000 new payrolls as well as the 12-month average monthly gain of 149,000. That April figure was 30,000 jobs lower than the initial print last month; March’s total was also revised downward, by 65,000 jobs, for a total of 120,000.
Still, the number was enough to qualify as America’s 53rd consecutive month of payroll gains.
Unemployment continued to remain static, coming in at 4.2%. That’s level with both April and March, and in line with analyst expectations.
5 Best AI ETFs for the Artificial Intelligence Era
“Stronger-than-expected jobs growth and stable unemployment underlines the resilience of the U.S. labor market in the face of recent shocks,” says Lindsay Rosner, head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management. “With the Fed laser-focused on managing the risks to the inflation side of its mandate, today’s stronger-than-expected jobs report will do little to alter its patient approach. We expect the Fed to remain on hold at this month’s meeting and think a softening in the labor market data is likely required for the Fed to continue its easing cycle.”
Also coming in ahead of forecasts was the May hourly earnings figure, which grew by 0.4% month-over-month, to $36.24. Economists were looking for 0.3% growth in wages. Over the past year, average hourly earnings have grown by 3.9%.
“Average hourly earnings came in a touch above consensus and was notably broad-based, with 17 of 18 major industry groups posting month-over-month gains,” says Jason Pride, Chief of Investment Strategy and Research at Glenmede. “This was led by services jobs such as information and financial activities, though wages in manufacturing and durable goods were notable contributors.”
Here’s a brief look at the May jobs report’s most pertinent details:
- May payrolls: +139,000 MoM (estimate: +125,000)
- May unemployment: 4.2% (estimate: 4.2%)
- May hourly earnings: +0.4% MoM (estimate: +0.3%)
- April payrolls (revised): +147,000 (+177,000 previously)
- March payrolls (revised): +120,000 (+185,000 previously)
Health care continues to be a massive source of employment strength, growing by 62,000 jobs in May, well ahead of the average monthly clip of 44,000 over the past year. Leisure and hospitality employment (+48,000) was robust, too, as was social assistance employment (+16,000).
Federal government employment was expected to recede again, and did, by 22,000 jobs. Federal payrolls have withered by 59,000 since January.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
Despite the numbers’ strength relative to the consensus, some economists continue to see cracks emerging in the country’s employment picture.
“Job growth has stabilized, but is still dominated by the catch-up sectors,” BofA Global Research’s economics team says. “Total and involuntary unemployment has been little changed in the last few months with voluntary unemployment continuing to outpace involuntary unemployment. The low pace of layoffs (and claims) has been a silver lining. While immigration restrictions would tighten the labor market, below-trend growth and DOGE actions should cause an uptick in the unemployment rate. On balance, we expect the unemployment rate to increase gradually, with a peak of 4.6% in Q2-Q3 2026.”
Powell Expected to Keep Interest Rates in Place
Friday’s report had economists and strategists convinced that the Federal Reserve would keep its hands off the benchmark Fed funds rate, currently set to a range of 4.25% to 4.50%, at the next Federal Open Market Committee (FOMC) meeting, scheduled for June 17-18.
“Fed Chair Jerome Powell appears prepared to leave interest rates unchanged at the upcoming June meeting, given the resilient labor market and with inflation still above the Fed’s target,” says Joe Gaffoglio, CEO and President at Mutual Of America Capital Management. “The unemployment rate remains steady, though concerns are growing, as hiring has slowed and new applications for jobless benefits have jumped. Still, consumer sentiment just posted its biggest jump since 2021 after declining for five consecutive months. Whether that optimism holds and bolsters economic momentum remains to be seen, especially amid the ongoing uncertainty around tariffs.”
What’s the $10,000 SALT Cap [And Will It Change]?
The CME FedWatch Tool, which uses Fed funds futures prices to track the probability of a change to the central bank’s benchmark rate, now shows a 99.8% chance that the Federal Reserve will stay put in June. That’s higher than the 96%-plus probability a day ago, and the 69% probability shown last month.
“The Fed is likely to continue to have little urgency to change course in light of today’s steady jobs report, with scant evidence that the labor market is in imminent need of policy support,” says Josh Jamner, Investment Strategy Analyst at ClearBridge Investments. “Fed funds futures priced out [a quarter-point] of a rate cut at September FOMC meeting following the jobs report, which is pushing up rates along the yield curve. The move higher at the long end could curb the upside for equities, but overall, today’s report should be supportive for risk assets and embedded earnings expectations near term.
More Expert Reactions to May’s Jobs Report
Here’s what other strategists, financial managers, and experts had to say about last month’s employment situation:
Adam Hetts, Global Head of Multi-Asset, Janus Henderson Investors
“A solid jobs report offers some relief after concerns brewed over data releases earlier this week. However, the slight beat on payrolls and earnings is partially offset by 95,000 in downward revisions. Good news is good news today although tariff uncertainty remains, making subsequent hard data releases over the summer extremely important for clarity on the post-Liberation Day economy.”
When and How to Adjust Your Tax Withholding
Scott Helfstein, Head of Investment Strategy, Global X
“The jobs number continues pointing towards a relatively healthy economy. Job openings were higher than expected this month, but hiring was slower. This is probably the result of economic policy uncertainty as companies take a wait-and-see approach. Animal spirits may be in hibernation but apparently not dead.
“Unsurprisingly, manufacturing was weak in this report and shed jobs again. This is not surprising after the sector slid back into expansion and runs contrary to the administration’s goal of expanding U.S. manufacturing. The mix of economic policies has not been favorable to onshoring or recovery as yet.”
Want to talk more about your financial goals or concerns? Our services include comprehensive financial planning, investment management, estate planning, taxes, and more! Schedule a call with Riley to discuss what you need, and what we can do for you.
