May Labor Market Resilient but Cools Slightly
The May labor market report continues to reflect a gradual cooling trend in the U.S. economy. Job gains came in above expectations but remain well below the levels seen throughout most of 2023 and early 2024. Revisions to prior months trimmed 95,000 jobs from March and April totals.
Labor market participation ticked downward, and hiring remains uneven across sectors. Federal employment fell by 22,000 jobs in May—driven by cuts associated with the “Department of Government Efficiency”—bringing year-to-date losses in the federal sector to 59,000. While layoffs remain modest, hiring hesitancy has taken hold amid tariff uncertainty, interest rate stagnation and unclear fiscal policy.
Still, resilient consumer demand in services and healthcare has kept the labor market from backsliding into contraction. Wage growth and low involuntary part-time employment remain bright spots, but many analysts caution that a continued slowdown in hiring is likely over the summer months.
The Numbers*:
The U.S. economy added 139,000 jobs in May, above expectations but remain well below the levels seen throughout most of 2023 and early 2024.
The unemployment rate remained the same at 4.2%.
There were 8.0M** open jobs, down from ~8.1M in April.
The labor force participation rate decreased to 62.4%.
The number of job quits in the U.S. remained the same at 3.4 million**, steady to slightly down; indicates lower voluntary turnover.
- Average hourly earnings rose by 0.4% month-over-month to $36.24.
- Average weekly hours worked remained unchanged to 34.3 hours.
- Total hires were 5.4M, while total separations were 5.3M.
- Within separations, layoffs/discharges accounted for 1.5 million.
Industry Trends:
| Industry | May Jobs | Notes |
| Healthcare | + 62,000 | Leading job growth driver |
| Leisure & Hospitality | + 48,000 | Strong recovery in food service |
| Social Assistance | + 16,000 | Individual/family services |
| Federal Government | - 22,000 | Ongoing policy-driven job cuts |
| Professional Services | - 18,000 | Weakness in consulting, legal and temp jobs |
| Manufacturing | - 8,000 | Broad-based slowdown: durable goods impacted |
| Retail | - 6,500 | Continued softness tied to tariff pricing |
The change in total payroll employment for March was reduced by 65,000, from +185,000 to +120,000. The change for April decreased by 30,000, from +177,000 to +147,000.
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* Above represents May 2025 Data
** Estimates
Sources:
- The Federal Reserve Beige Book
- Bureau of Labor Statistics Employment Situation
- NBC News
- New York Times
- CNN
Past Reports
