As consumers anticipate how U.S. trade policies might continue to impact their economic security, a new report released by the U.S. Bureau of Labor Statistics shows the unemployment rate remained steady in May while employers continued to add job opportunities in the workforce.
According to the report, employers added 139,000 jobs in May, and the unemployment rate remained unchanged at 4.2 percent.
“I think that we could describe this month’s jobs report as being not bad but certainly not great,” said Abby Hall, an associate professor of economics at the University of Tampa.
Hall said the job numbers may be an indication of a reaction to policy.
“The gains that we saw were primarily in health as well as travel and retail. But a lot of other sectors were fundamentally stagnant,” she said. “Manufacturing, which has been a big emphasis on the part of this administration, actually saw cuts last month of about 8,000 jobs.”
A report issued by the Institute for Supply Management found “economic activity in the manufacturing sector contracted in May for the third consecutive month.”
According to the Bureau of Labor Statistics, the health care industry added 62,000 jobs in May, and the leisure and hospitality industry also increased opportunities by 48,000 compared to an average of 20,000 jobs added per month.
In contrast, jobs within the federal government declined by nearly 22,000.
“When we start to see that there's one or two sectors that are primarily driving growth, but everybody else is stagnant or cutting jobs, this is not a particularly good sign of an economy that is robust and healthy,” said Hall.
She said employers and employees may be less willing to make big changes in their companies and lives right now. “A lot of that we can attribute to policy uncertainty with tariffs and with other actions by the administration.”
“At the end of the day, this was not a bad jobs report,” said Ernie Tedeschi, the director of economics at the Budget Lab at Yale. “I think what this jobs report does is it makes it less likely, much less likely that the (Federal Reserve) entertains any sort of rate cuts at their next meeting.”
Tedeschi said economists often call the labor market a “lagging indicator” of what may be to come.
“You usually don’t see the effects of economic weakness in the unemployment rate or in jobs growth until a little bit after it’s soaked into the full economy,” he said. “What I think will be more interesting this month will be to see the inflation data. Even there, I don’t expect to see anything dramatic, like a huge rise in inflation.”
Tedeschi said the effects of tariffs will “seep into the data” gradually over time.
“If the retaliatory tariffs that we’ve seen from places like China and Canada remain, that could put a damper in a lot of our manufacturing exports,” he said.
“Tariffs are not like COVID. They don’t all of a sudden overnight dramatically change the data,” he said. “I think that there definitely is economic weakness, and we can see in high-frequency data that prices are rising in places like Amazon, especially for imports, but I think it’s going to take a while still to work its way into official data.”
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For the average consumer, Hall said it is important to be aware of these latest economic numbers, which she described as “cautious.”
“What is going on in the overall economy influences directly how much things cost, how much your savings account has in terms of interest. It also impacts things like people’s interest rates on home loans, car loans, and any other thing that you might be going to the bank for, so when we look at these numbers, it’s not just this overall kind of nebulous macroeconomy that’s affected. It’s people’s day-to-day lives as well as people’s day-to-day budgets.”
