06.06.2025 U.S. Job Market Cools in May with 139,000 Jobs Added

Fed Rate Outlook in Focus | Key Inflation Data Ahead | Automated Trading Results Included

The U.S. economy added 139,000 new jobs in May, surpassing Wall Street expectations of 120,000, yet the report highlights a gradually cooling labor market. According to Friday’s release from the Bureau of Labor Statistics (BLS), payroll gains declined from April’s revised total of 147,000 jobs, while the unemployment rate remained steady at 4.2%, still hovering near historic lows.

Stock markets opened sharply higher Friday, with major U.S. indexes up about 1%. However, U.S. Treasury yields rose, reflecting expectations that the Federal Reserve will keep interest rates elevated longer, making government debt less appealing.

One stark trend in the report was the continued reduction in federal employment. The federal sector shed 22,000 jobs in May alone, bringing cumulative losses to 59,000 positions since January—a result of aggressive cuts by the current administration and cost-efficiency reforms led by the Department of Government Efficiency.

Despite steady hiring, other indicators signal weakness:

• Employment-to-population ratio fell to 59.7%, its lowest since the pandemic.

• Broader unemployment metrics (including discouraged workers) climbed to 4.5%, a post-pandemic high.

President Donald Trump painted an upbeat picture on Truth Social, declaring: “AMERICA IS HOT! SIX MONTHS AGO IT WAS COLD AS ICE!” But in reality, while wage growth has cooled from 4.2% to 3.9%, labor force participation and employment ratios remain only marginally changed from late 2024. The one clear positive: inflation has eased from 2.7% to 2.3% year-over-year.

Analysts from ManpowerGroup described the labor market as “steady but cautious,” noting a broad-based deceleration in hiring momentum. Capital Economics added: “May’s report looks better than it is. The labor market is slowing, though tariffs appear to have minimal short-term impact so far.”

Additional Signals of Labor Market Weakness

• ADP reported the slowest private-sector job growth since March 2023.

• The Institute for Supply Management (ISM) reported the first contraction in U.S. service sector activity in nearly a year.

• Weekly jobless claims hit their highest level since October, and continued claims suggest prolonged job search times.

Moody’s Analytics chief economist Mark Zandi warned of future headwinds: “Damage from the trade war is coming. Higher import tariffs are likely to push prices up.” The Federal Reserve’s own survey this week echoed these concerns, noting businesses expect costs and prices to rise further due to tariffs.

The Congressional Budget Office forecasts tariffs could add 0.4 percentage points to inflation in 2025–2026. Zandi predicted that as demand softens, layoffs may accelerate, with job gains likely dropping below 100,000 per month.

Already, companies appear hesitant to invest or expand hiring. The BLS noted that the hiring rate remains at 2014 levels, reminiscent of the slow post-Great Recession recovery.

Market Focus Shifts to Inflation Data

Attention now turns to next week’s key reports:

• Consumer Price Index (CPI) on Wednesday — markets will watch for early signs of tariff-related inflation.

• Producer Price Index (PPI) on Thursday — deeper insights into wholesale cost pressures.

• Consumer Sentiment on Friday — capturing consumer confidence amid the evolving economic landscape.

Upcoming Earnings to Watch

• Tuesday: GameStop, J.M. Smucker

• Wednesday: Chewy, Oracle

• Thursday: Adobe

Geopolitical Tensions & Leadership Frictions

In the background, Russia-Ukraine tensions are escalating, while Trump-Musk political friction is drawing headlines.

Our Automated Trading System Performance This Week (June 3–6)

ES (S&P 500 Futures) — Day Trading Results

Swing Trading Results

Summary

Despite broader economic headwinds, our automated trading system maintained profitable performance in equity and forex markets, with strategic positioning in S&P 500 Futures and currency pairs.

Wishing you a great week!