Employers added 139,000 jobs in May as labor market remains steady

Employers across the U.S. added 139,000 jobs in May new federal data shows, a sign the labor market remains steady despite economic headwinds from tariffs.

Stocks rose on Friday, following the better-than-expected report. The S&P 500 was up 64 points, or 1.1% as of 10:57 a.m. EST. The Dow Jones Industrial Average climbed 464 points, or 1.1% and the Nasdaq Composite rose 1.3%.

Payroll gains in May exceeded economists' forecast of 130,000. Job growth over the last 12 months has averaged 156,800 per month, according to financial data firm FactSet.

The nation's unemployment rate held steady at 4.2% for the third month in a row, matching forecasts by economists polled by FactSet.

Job growth was slightly weaker in May compared with previous months. Employers added 177,000 jobs in April although the Labor Department revised those numbers down to 147,000.

While job growth was lower than in previous months, the data suggests that the job market is holding up under tariff pressure. Still, economists warn the economy could slow in the coming months.

The jobs numbers reflect a labor market that is "steady but cautious in the face of ongoing uncertainty," Ger Doyle, regional president at global workforce solutions company ManpowerGroup, wrote in a note.

Health care companies, along with the leisure and hospitality industry, saw the largest gains in employment last month, adding 62,000 and 48,000 jobs, respectively. Federal employment declined 22,000 in May and is down 59,000 since January, according to the Labor Department.

Other employment data released this week hinted at a potential slowdown in the labor market, with firms pulling back on hiring and issuing staff reductions amid tariff-induced economic uncertainty. Unemployment claims last week ticked up to their highest level in eight months, Labor Department data shows. The biggest increase in unemployment claims was in Kentucky, followed by the District of Columbia and Nebraska, according to a report from WalletHub.

However, the addition of 100,000 jobs in May is a positive sign, economists say.

"Jobs came in slightly better than expected, removing some worries after the very cool ADP report on Wednesday this week," said Brian Mulberry, client portfolio manager at Zacks Investment Management, in a note.

"AMERICA IS HOT! SIX MONTHS AGO IT WAS COLD AS ICE! BORDER IS CLOSED, PRICES ARE DOWN. WAGES ARE UP!" President Trump wrote in a post on Truth Social on Friday in response to the jobs report.

Some analysts caution that despite the better-than-expected numbers, there may still be trouble up ahead for the economy.

"Investors will breathe a sigh of relief at the 139K figure, but the details of the release suggest that growth storm clouds are darkening," wrote Adam Crisafulli, head of Vital Knowledge, in a research note.

David Royal, CFIO of financial services company Thrivent, said stagflation remains a concern and that the report signals a "weakening employment picture."

The modest job gains and steady unemployment rate are likely to keep the Fed on the sidelines for at least the next few months, economists said. The Fed is scheduled to meet next from June 17 to 18. The central bank Fed has kept its key short-term interest rate unchanged this year, after cutting it three times last year.

Fed chair Jerome Powell and most other Fed policymakers have voiced concern that Trump's tariffs could push up inflation later this year, which they would seek to counter by raising rates. The Fed is only likely to accelerate interest rate cuts if the job market sharply deteriorates, which didn't happen last month.

Meanwhile, Mr. Trump renewed his push for the Fed to cut rates on Friday, writing on Truth Social that the move would "greatly reduce interest rates, long and short, on debt that is coming due."

• United States Department of Labor
• Jobless Claims
• Tariffs