US labor market weaker, but not weak

The data ...

In May, job growth in the US amounted to 139,000. This is about in line with expectations (consensus 125,000, Commerzbank 150,000). However, the data for prior months were revised down by a combined 95,000. The unemployment rate remained at 4.2%. Average hourly earnings rose by 0.4% from the previous month, thus increasing slightly more strongly again. As in April, wages rose by 3.9% year-on-year, with the April figure being revised upwards from 3.8%.

... and the interpretation

This means that US employment rose significantly again in May. However, the increases in previous months were revised significantly downward. In March, the figure was 120,000 (instead of the previously reported 185,000), and in April it was 147,000 (previously: 177,000). The average monthly increases have thus leveled off at between 100,000 and 150,000 in 2025. This is significantly less than a year or two ago, but still quite solid. In any case, it is sufficient to keep the unemployment rate largely stable. At 4.2%, it remained unchanged for the third month in a row, but at 4.244% it was close to rounding higher and also slightly higher than in January (4.0%).

However, there is certainly no sign of a slump in the labor market. The frequently cited massive increase in uncertainty due to tariffs has not yet had a noticeable negative impact. However, the effects of the tariffs are only beginning to be felt. We continue to expect employment growth to slow in the coming months and unemployment to rise slightly.

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