US employment rises moderately in May; unemployment steady at 4.2%

The US job market continued its steady growth in May 2025, with total nonfarm payroll employment increasing by 139,000, according to the latest report from the Bureau of Labor Statistics (BLS). The unemployment rate held steady at 4.2 per cent, a level it has hovered around since May 2024.

Hiring was driven by notable gains in health care, leisure and hospitality, and social assistance, while federal government employment continued to shrink. The increase was slightly below the monthly average of 149,000 jobs seen over the past year, signalling a stable but cooling labour market.

Health care saw the strongest performance, adding 62,000 jobs. Within the sector, hospitals and outpatient care services led the charge, contributing 30,000 and 29,000 new positions, respectively.

The leisure and hospitality industry also showed robust growth, adding 48,000 jobs, with 30,000 of those in food services and drinking establishments. Social assistance roles, particularly in individual and family services, grew by 16,000 jobs.

US President Donald Trump’s aggressive protectionist policies, especially his sweeping tariffs on imports, have muddied the outlook for the economy and the job market and raised fears that the American economy could be headed toward recession. But so far the damage hasn’t shown up clearly in government economic data.

Economists say Trump’s flip-flopping on import tariffs has hampered businesses’ ability to plan ahead and hire more workers. Opposition to Trump’s tax cut and spending bill from conservative Republicans in the US Senate and tech billionaire Elon Musk has added another layer of uncertainty for companies.

Workforce participation slips

While the headline unemployment rate stayed unchanged, some underlying figures revealed subtle shifts. The number of unemployed people rose slightly to 7.2 million, with a notable increase in those jobless for less than five weeks, suggesting recent layoffs. Meanwhile, the number of long-term unemployed (those out of work for 27 weeks or more) dropped by 218,000 to 1.5 million.

However, fewer people were participating in the workforce. The labour force participation rate declined to 62.4 per cent, and the employment-population ratio dipped to 59.7 per cent. These decreases suggest that some individuals may have stopped looking for work or are facing barriers to employment.

There was also little change in the number of people working part-time for economic reasons, which remained at 4.6 million. These are individuals who would prefer full-time employment but are unable to find it or had their hours cut.

Federal government jobs drop again

One of the few areas to record a clear decline was the federal government, which lost 22,000 jobs in May. Since January 2025, federal employment has decreased by 59,000. The BLS clarified that employees on paid leave or receiving severance are still counted as employed, so these losses reflect deeper structural reductions.

Most other industries, including construction, manufacturing, retail trade, and professional services, showed little or no net change in employment last month.

Wages rise modestly

On the earnings front, average hourly wages for all private-sector employees rose by 15 cents, or 0.4 per cent, to $36.24. Over the past 12 months, wages have grown by 3.9 per cent. Production and non-supervisory employees saw similar wage growth, with average hourly earnings rising to $31.18.

President Trump cheered the numbers, posting on his Truth Social platform on June 6, saying, "America is hot! Six months ago it was cold as ice! Border is closed, prices are down. Wages are up!"

The average workweek remained steady at 34.3 hours, unchanged for the third consecutive month.

While job growth continues, recent revisions to prior months’ data show the economy added fewer jobs than originally reported. March’s job gains were revised down by 65,000 to 120,000, and April’s by 30,000 to 147,000, bringing the combined downward revision to 95,000.

NBC News reported that analysts with ManpowerGroup said in a note that the report points to “a labour market that is steady but cautious in the face of ongoing uncertainty”.