The May jobs report beat expectations with +139k added, but...
Sam Williamson@SWilliamsonEcon
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Jun 06, 2025
~1 min read
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The May jobs report beat expectations with +139k added, but downward revisions to March and April (-95k) temper the gain. The unemployment rate remained flat at 4.2%, while the labor force participation fell slightly to 62.4%. The data supports the Fed’s view of a still-resilient labor market, likely extending its ‘wait-and-see’ stance as inflation remains the top concern. More details below.
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May job gains were narrowly concentrated, with Education & Health contributing 63%, Leisure & Hospitality 35%, and Financial Activities 10%—highlighting subdued hiring across most sectors. Manufacturing and Professional & Business Services gave back some of April’s gains, while Retail Trade extended its decline. Government employment was flat overall, as federal losses were offset by local hiring.
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Unemployment continues to hover in the 4.0-4.2% range, as it's done since last May, reflecting employers’ reluctance to shed workers and employees’ tendency to stay put. Labor force participation continues trending downward, as it's done since late 2023, and remains below pre-pandemic levels. Prime-age participation (ages 25–54) ticked down slightly in May but remains near historic highs at 83.4%.
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After a sluggish start to the year, residential construction payrolls rose by 0.4%—a positive signal for homebuilding activity. While year-over-year growth has edged down slightly in recent months, it remains steady around 2.0–2.1%. In contrast, employment among residential specialty trade contractors continued to decline, potentially reflecting economic uncertainty tied to tariff developments in April and May.
