Against all odds US adds 139,000 jobs in May as trade war fears rattle markets

Employment remained steady despite Trump’s tariffs risking trade tensions and potential recession(Image: Getty Images)

The United States added 139,000 jobs in May despite the trade war and uncertainty in the market.

In April, President Donald Trump unveiled sweeping tariffs of at least 10% or even higher that the United States will levy on countries, increasing the risk of spurring a global trade war.

According to the data released on Friday by the Bureau of Labor Statistics, the payroll gains have exceeded forecasts that predicted about 120,000.

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However, hiring fell from a revised 147,000 in April, as the job gains last month were above what economists had forecast. The unemployment rate is near a historic low at a steady 4.2%.

Healthcare companies added 62,000 jobs while bars and restaurants added 30,000. However, the federal government shed 22,000 jobs as Trump’s administration continues to slash employment. Factories lost 8,000 jobs last month.

The report revealed that hourly wages rose 0.4% from April and 3.9% on average from a year earlier, which is slightly higher than the forecast.

There were a few signs of potential weakening. Labor Department revisions shaved 95,000 jobs from March and April payrolls

Including those who are working as well as those who are seeking employment, the numbers fell by 625,000 last month, which is the biggest drop since December 2023.

The percentage of people who had jobs fell last month to 59.7%, the lowest level since January 2022.

The Trump administration’s aggressive economic policies, particularly its sweeping tariffs, alarmed economists who were anticipating a possible recession in the nation.

However, government data so far points otherwise.

“The job market is still standing tall even as some of these headwinds start to blow,” Daniel Zhao, the lead economist at Glassdoor, told the Associated Press.

“But ultimately, we’re all still waiting for the other shoe to drop. It’s still much too early for tariff impacts to be a significant drag on the economy.”

The U.S. economy and job market have proven surprisingly resilient in recent years. When the inflation fighters at the Federal Reserve raised their benchmark interest rate 11 times in 2022 and 2023, the higher borrowing costs were widely expected to tip the United States into a recession. They didn’t.

Still, the job market has clearly decelerated. So far this year, American employers have added an average of less than 124,000 a month. That is down 26% from last year, almost 43% from 2023, and a whopping 67% from 2022.

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 central bank, the 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. But so far, hiring is holding up.

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