May Jobs Report: US Labor Market Cools, Fed on Pause

Despite the US economy adding 139,000 jobs in May 2025, the Bureau of Labor Statistics found that unemployment was still 4.2%. Although the May number is nearing or surpassing the 12-month average increase of 149,000 jobs per month, it does show a decrease from the rise of 177,000 jobs in April. Although May-specific wage data was not disclosed, it was recently disclosed that average hourly earnings were increasing at a rate of 3.8% per year in April, and there were predictions of 3% growth in May this year.

The slowdown in hiring has been observed, and economists are expecting a more relaxed report due to the uncertainty surrounding tariff policy and wider economic pressures. Although the May jobs gain wasn't low enough to trigger an immediate recession, it did provide some context for a labor market that was gradually cooling. However, this is still moving towards caution. The ADP report from earlier this week reveals a decrease in private sector activity.

The Federal Reserve's cautious approach is backed by a consistent unemployment rate and moderate job growth, which has the potential to impact future rates. This information keeps the Federal Reserve in a waiting state, with future actions likely to be determined by further changes in the labor market and inflation. The release of the NFP may have an effect on the US dollar and financial markets as investors put the data into perspective in relation to Fed policy and wider economic momentum.