Amid uncertainty, employers keep hiring

Despite the White House waging an aggressive trade war, DOGE taking a sledgehammer to the federal workforce, and worst of all, news that Taylor Swift will not be releasing a re-recording of Reputation anytime soon…the labor market is managing to keep it together.

This morning, the Bureau of Labor Statistics reported that US employers added 139,000 jobs in May, slightly beating expectations. While the employment numbers were by no means an A+, C’s get degrees, and the performance was a welcome surprise to those on the Street who thought the chaotic policy environment may be starting to crack a core pillar of the economy.

Here’s what else we learned from the May jobs report:

• The unemployment rate stayed steady at 4.2%.
• Average hourly wages jumped 0.4% since last month and rose 3.9% from last year, beating expectations.
• Jobs growth was uneven: The healthcare and social assistance sector was a bright spot, adding 78,000 jobs in May. Leisure and hospitality added 48,000 jobs, while manufacturing lost 8,000 jobs.
• Some meh news: The number of jobs created in the past two months has been revised down by 95,000.

The labor market pulling off an upset today doesn’t mean it’s in perfect health. After all, analysts pointed out, the worst effects of the trade war may not be felt yet.

“We expect to see further softening in the second half of 2025 as tariffs and other policy measures weigh more heavily on the economy, leading the Fed to start cutting rates in September,” explained Senior US Economist, UBS Global Wealth Management Brian Rose.

Powell’s puzzle persists

As Fed Chair Jerome Powell ponders what to do about interest rates, today’s data supports keeping rates the same for now. Why? The Fed is unlikely to risk stoking inflation by lowering rates when the economy is not in dire shape.

“If payroll growth trudges on like this, the Fed will likely remain in ‘wait and see’ mode,” explained Chief Economist for LPL Financial Jeffrey Roach.

Traders agree, pricing in a 99.9% chance that the Fed will keep rates the same at its meeting later this month, and an 83% chance rates will be kept the same again in July.

It’s rare to see anyone be that sure about anything these days.—LB