May Jobs Report Shows Resilient Hiring Amid Economic Headwinds
Hiring in May exceeded expectations with 139,000 new nonfarm payroll jobs, though it slightly trailed April’s revised figure. The unemployment rate remained steady at 4.2%, while wages grew more than forecast, highlighting labor market resilience despite economic headwinds. Job gains were led by health care, leisure and hospitality, and social assistance, though government employment fell due to federal workforce cuts. However, underlying concerns included downward revisions to prior months’ job counts and a sharp drop in full-time employment from the household survey.
Fed ‘Beige Book’ Signals Slowing Economy and Rising Tariff Concerns
The Federal Reserve’s Beige Book reported a slight economic contraction over the past six weeks, driven by hiring slowdowns and growing concerns over tariff-related price increases. Businesses and households are showing increased caution, with lower labor demand, hiring pauses, and some sector-specific layoffs. Inflation pressures are mounting, with widespread expectations of faster cost and price increases due to higher tariffs. Regional economic performance was mixed, with some districts seeing declines while others experienced modest growth.
U.S. Trade Deficit Shrinks as Imports Slow
The U.S. trade deficit fell by a record $76.7 billion in April to $61.6 billion, reversing a previous surge driven by pre-tariff import stockpiling. Imports dropped sharply by 16.3%, while exports rose 3%, following President Trump’s imposition of broad 10% tariffs and subsequent easing amid ongoing trade talks. Despite the monthly drop, the year-to-date deficit remains up 65.7% from 2024, with China, the EU, and Vietnam representing the largest trade gaps. Economists caution that a shrinking deficit isn’t inherently positive, as trade has generally benefited U.S. consumers and businesses.
