U.S. Job Growth Slows in May Amid Ongoing Trade Uncertainty
The U.S. economy added 139,000 jobs in May, signaling a slowdown in hiring as businesses face continued uncertainty stemming from Donald Trump’s trade policies. This marks a drop from April’s more robust figures, which had suggested resilience despite growing tensions over international trade.
Data from the Bureau of Labor Statistics showed that the unemployment rate held steady at 4.2%, unchanged from the previous month. The moderation in job growth came as no surprise to economists, many of whom had anticipated a decline following early indicators of a cooling labor market. Earlier in the week, payroll processing firm ADP reported that private-sector employment rose by just 37,000 in May—the weakest increase in more than two years.
“After a strong start to the year, hiring is losing momentum,” said Nela Richardson, chief economist at ADP.
Other indicators also pointed to a slowing economy. The Institute for Supply Management’s Purchasing Managers’ Index (PMI) registered a reading of 49.9 in April, its lowest level since June 2024, reflecting contraction in the manufacturing sector.
Meanwhile, consumer sentiment remained relatively flat from April to May, according to the University of Michigan’s latest survey. However, economists noted that April’s sentiment had already marked the steepest monthly decline since 1990, suggesting underlying anxiety among consumers.
Despite these signs of a slowdown, the full impact of Trump’s trade war has yet to appear in inflation data. The annual inflation rate for April stood at 2.3%, slightly down from March. Analysts believe any inflationary effects from recent tariffs are likely to emerge over the summer.
Markets are closely watching trade negotiations between Trump and Chinese President Xi Jinping, especially after both sides acknowledged a breakdown in previous talks. On Thursday, Trump described a recent phone call with Xi as “very positive.” Last month, the U.S. lowered tariffs on Chinese imports from 145% to 30%, while China reciprocated by reducing its tariffs on U.S. goods from 125% to 10%.
Adding further volatility, a federal trade court temporarily blocked several of Trump’s tariffs, including a 10% universal baseline rate. However, within 24 hours, an appeals court reversed the decision, reinstating the tariffs and reaffirming Trump’s controversial trade agenda.
