The interpretation

Dan North, a senior economist with Allianz Trade Americas, told the Washington Examiner that the report is a “mixed bag.”

“Obviously, the headline non-farm payrolls came in a bit warm, but there were revisions, of course, down for the past two months,” he said. “Earnings a little bit warm, but on the other hand, participation a little bit light. So, it’s all things considered, not a bad report, no glaring errors. Manufacturing down a little bit, which is not surprising.”

What it means … for Trump

Friday’s report shows that the labor market was strong in May, even if it lost some momentum. More jobs were added than economists anticipated, and the unemployment rate held steady. The report, though, showed large downward revisions to the job gains of the previous two months.

Overall, the numbers suggest the economy is holding up as President Donald Trump moves past the first part of his second term.

Trump’s actions so far have dramatically raised uncertainty, at times raising fears about a downturn. In particular, the rollout of tariffs on a scale unseen since before the Great Depression damaged consumer confidence and led businesses to worry about supply chains. Trump is also working with congressional Republicans to pass a massive fiscal overhaul that would extend tax cuts and cut some federal spending. 

Democrats would use any weakness in the labor market to place blame on Trump and his Make America Great Again agenda.

What it means for … the Fed

Friday morning’s report did little to change investor expectations that Federal Reserve officials are not likely to cut their interest rate target before September.

Trump has been pressing Fed Chairman Jerome Powell hard to lower rates to boost borrowing and spending.

The underlying reality

Friday’s report suggests that job growth has been decelerating in recent months. 

It is helpful to look at the overall trend for the labor market. With significant downward revisions to the numbers for March and April, the three-month moving average of job gains was just 135,000 in May. That is still above the rate needed to keep up with population growth.

Roughly 112,000 new payroll jobs are needed each month to keep unemployment from rising, according to the Federal Reserve Bank of Atlanta. Separate estimates that take into account the full extent of the Biden-era immigration surge put the number as high as 200,000, although that has likely changed in recent months as the Trump administration has dramatically curbed unauthorized border crossings.

Prime-age employment, relative to the overall population, is strong by historical standards, although it appears to have peaked in recent months.

Recession watch

The unemployment rate, taken from the jobs report’s household survey, is still low by historical standards. It held at 4.2% in May after gradually creeping up over the past year.

Recessions entail a rising unemployment rate.

Friday’s data suggest that the U.S. labor market is still moving away from triggering one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, signaled the start of all postwar recessions.

The indicator had been triggered in mid-2024 but is no longer signaling a recession.

Federal government employment

Federal government employment fell by 22,000 in May and is now down about 59,000 since Trump came into office. The number of federal employees is a key statistic to watch to see the effects of the budget-cutting efforts of the Trump administration and the Department of Government Efficiency.

Manufacturing employment

Employment in manufacturing fell by 8,000 in May. 

The manufacturing sector is of particular interest because Trump has said his tariffs will bring manufacturing to the U.S. from other countries. He imposed tariffs on China and trading partners around the world, on steel, aluminum, autos, auto parts, and other goods and services. 

Other industries

The leisure and hospitality sector in the past year has finally exceeded the employment levels it reached in February 2020, right before restaurants and bars were forced to shut down across the country. It has continued to grow steadily.

Construction employment has remained robust, even as the housing market has taken a massive hit over the past few years, as mortgage rates have soared alongside the Fed’s rate hikes. That’s in part because of a huge backlog of construction of multifamily housing over the past year. Economists will watch closely for any sign of slowing hiring in construction.

Unemployment rates by race and ethnicity

The household survey also includes unemployment rates by race and ethnicity. Rates for all groups neared record lows in the past few years.

Unemployment rates held steady for white workers in May but rose for Asian workers and fell for Hispanic and black workers.