Today's jobs report showed that hiring remained decent enough to likely keep Federal Reserve rate cuts on hold this summer, but prior months' job gains were revised down pretty sharply and the survey of household showed a big drop in employment. S&P 500 futures are rising after the data, with Tesla leading the way after CEO Elon Musk and President Donald Trump apparently paused their war of words.
There have been growing signs that the labor market is turning cool, from rising jobless claims to increased corporate layoff announcements. However, Fed concerns over renewed inflation pressures driven by Trump tariffs create a high bar for resuming rate cuts.
9:29 a.m. ET
Reaction To Jobs Report
"The labor market is slowing, but the pace of the slowdown remains too gradual for the FOMC to ease policy at its next two meetings, given its desire for greater clarity on the scale of the uplift to inflation from the new tariffs." — Samuel Tombs, chief U.S. economist, Pantheon Macroeconomics
9:06 a.m. ET
More Jobs Report Details
The Bureau of Labor Statistics' employer survey shows a deterioration in the breadth of job growth, with a 50 reading for the diffusion index, which indicates an equal balance between the number of industries with increasing and decreasing employment. That was down from positive readings of 51.6 in March and 51.8 in April.
Job gains were led by health care and social assistance (78,300) and leisure and hospitality (48,000). Factories shed 8,000 workers, while retailers cut 6,500 jobs and temp help services 20,200.
Federal government employment fell by 22,000 amid a federal hiring freeze, but that was mostly offset by job gains at the state and local level.
Overall, the private sector added 140,000 jobs and the government trimmed 1,000.
8:58 a.m. ET
Fed Rate-Cut Outlook
After the jobs report, markets are pricing in 99.9% odds of no rate cut at the June 18 Federal Reserve meeting. Odds of a rate cut at the July 30 Fed meeting tumbled to 14.5% from 30% ahead of the data.
Markets now see 34% odds of just one quarter-point rate cut this year, up from 26% before the jobs report.
8:54 a.m. ET
Weak Household Survey
The headline hiring figure comes from a midmonth employer survey, while the unemployment rate comes from a survey of households that has a higher margin of error.
While the steady 4.2% jobless rate looks like a status-quo reading, the household survey data was actually a bit shocking. The ranks of the employed tumbled by 696,000. Yet the number of unemployed persons only rose 71,000, because the ranks of labor force participants — those employed or actively looking for work — sank by 625,000.
Some economists have raised the possibility that Trump's immigration crackdown could have a negative impact on labor force participation.
Below the surface, the household survey shows that the number of people who have been unemployed for less than five weeks jumped by 264,000, which suggests a much weaker hiring climate. However that was mostly offset by a 218,000 drop in the number of people who have been unemployed for at least 27 weeks.
8:42 a.m. ET
S&P 500 Reaction
The S&P 500 rose 0.8% soon after the jobs report release, adding to modest gains. The 10-year Treasury yield rose several basis points to 4.45%.
8:38 a.m. ET
Jobs Report Data
Employers added 139,000 jobs in May, slightly topping 129,000 forecasts. The unemployment rate held at 4.2%, as expected.
Job gains for March and April were revised down by a combined 95,000.
Average hourly earnings surprised on the upside, rising 0.4%. That lifted 12-month wage growth to 3.9%, above 3.7% forecasts.
Jobs Report Expectations
Wall Street economists are forecasting a net gain of 129,000 nonfarm payrolls, with 120,000 additional private-sector positions.
The unemployment rate is seen holding at 4.2%. Average hourly earnings are expected to rise 0.3% on the month, while the 12-month rate of wage growth is seen dipping to 3.7% from an initially reported 3.8%.
Fed Rate-Cut Odds
Ahead of the jobs report, markets are pricing essentially no chance (2.6% odds) of a rate cut at the upcoming June 18 Fed meeting. Odds of a cut at the July 30 meeting have crept up to 30% from 26% a week ago.
For the full year, markets see 74% odds of at least 50 basis points in cuts, but just 36% odds of 75 basis points in easing.
S&P 500 Futures
S&P 500 futures are climbing 0.4% in Friday's stock market action ahead of the jobs report. The S&P 500 slipped 0.5% on Thursday, despite news that President Trump and Chinese President Xi Jinping set talks to resolve Beijing's freeze on rare-earth exports to the U.S.
The S&P 500 finished 3.3% below its Feb. 19 all-time high and up 19.2% from its 52-week closing low on April 8, just before the pause of reciprocal tariffs.
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