| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Nonfarm Payrolls - M/M | 129,000 | 100,000 to 190,000 | 139,000 | 177,000 | 147,000 |
| Unemployment Rate | 4.2% | 4.1% to 4.3% | 4.2% | 4.2% | |
| Private Payrolls - M/M | 120,000 | 95,000 to 140,000 | 140,000 | 167,000 | 146,000 |
| Manufacturing Payrolls - M/M | 0 | -5,000 to 3,000 | -8,000 | -1,000 | 5,000 |
| Participation Rate | 62.4% | 62.6% | 62.6% | ||
| Average Hourly Earnings - M/M | 0.3% | 0.2% to 0.3% | 0.4% | 0.2% | 0.2% |
| Average Hourly Earnings - Y/Y | 3.7% | 3.6% to 3.7% | 3.9% | 3.8% | 3.9% |
| Average Workweek | 34.3hrs | 34.3hrs to 34.3hrs | 34.3hrs | 34.3hrs |
Highlights
The FOMC will find signs of further cooling in the labor market in the May employment report. The unemployment rate remains steady at a level historically consistent with a healthy labor market able to absorb new entrants and those separated from their jobs. However, the general downward direction of new hiring suggests that businesses are only hiring where necessary and with a wary outlook for economic conditions. The FOMC may deem the labor market remains solid but with a gloomier forecast for the future.
Nonfarm payrolls are up 139,000 in May, a bit above the consensus of up 129,000 in the Econoday survey of forecasters. However, there is a net downward revision to the prior two months of 95,000. The first two months of the second quarter 2025 shows a monthly average increase in payrolls of 143,000, while payroll growth in the first quarter is less than previously thought with a monthly average of up 111,000. Both are below the monthly average of up 209,000 in the fourth quarter 2024. Hiring is ongoing in the present economy, but the underlying trend is slower. Hiring is more diffuse and subject to uneven demand in the major sectors.
Hiring among goods-producers is down 5,000 in May. Construction has been a strong performer since the pandemic sparked a hot housing market but appears to be losing momentum with an increase of 4,000 in May. Manufacturing payrolls are down 8,000 in May and mining and logging are down 1,000. Payrolls at private service-providers are up 145,000 in May. Over half of that is accounted for with an increase of 78,300 in health care and social assistance. One-third of the sectoral increase is from 48,000 new hires in leisure and hospitality at the start of the summer vacation season. Government hiring is down 1,000 in May with federal jobs down 22,000, state government jobs flat, and local government up 21,000.
Average hourly earnings are up 0.4 percent in May from April and up 3.9 percent compared to a year ago. The annual increase has been steady for the last five months, suggesting a plateau in wage gains. The average workweek is unchanged at 34.3 in May from April.
The unemployment rate is 4.2 percent in May, the same as in the prior two months. The U-6 rate the broadest measure of unemployment is unchanged at 7.8 percent in May from April. The participation rate is down two-tenths to 62.4 percent in May, erasing the rise in the prior two months. The civilian labor force shrinks 625,000 to 179.510 million in May with the number of people employed down 696,000 to 163.273 million and the number of unemployed up 71,000 to 7.237 million.
Although the pool of workers is smaller, so are the number of jobs open. A less competitive job market means less churn. The number of people leaving one job for another is down for a second month in a row and falls 151,000 to 704,000 in May. May is typically a month in which college graduates enter the workforce. New entrants are 24,000 higher in May to 725,000.
Nonfarm payrolls are up 139,000 in May, a bit above the consensus of up 129,000 in the Econoday survey of forecasters. However, there is a net downward revision to the prior two months of 95,000. The first two months of the second quarter 2025 shows a monthly average increase in payrolls of 143,000, while payroll growth in the first quarter is less than previously thought with a monthly average of up 111,000. Both are below the monthly average of up 209,000 in the fourth quarter 2024. Hiring is ongoing in the present economy, but the underlying trend is slower. Hiring is more diffuse and subject to uneven demand in the major sectors.
Hiring among goods-producers is down 5,000 in May. Construction has been a strong performer since the pandemic sparked a hot housing market but appears to be losing momentum with an increase of 4,000 in May. Manufacturing payrolls are down 8,000 in May and mining and logging are down 1,000. Payrolls at private service-providers are up 145,000 in May. Over half of that is accounted for with an increase of 78,300 in health care and social assistance. One-third of the sectoral increase is from 48,000 new hires in leisure and hospitality at the start of the summer vacation season. Government hiring is down 1,000 in May with federal jobs down 22,000, state government jobs flat, and local government up 21,000.
Average hourly earnings are up 0.4 percent in May from April and up 3.9 percent compared to a year ago. The annual increase has been steady for the last five months, suggesting a plateau in wage gains. The average workweek is unchanged at 34.3 in May from April.
The unemployment rate is 4.2 percent in May, the same as in the prior two months. The U-6 rate the broadest measure of unemployment is unchanged at 7.8 percent in May from April. The participation rate is down two-tenths to 62.4 percent in May, erasing the rise in the prior two months. The civilian labor force shrinks 625,000 to 179.510 million in May with the number of people employed down 696,000 to 163.273 million and the number of unemployed up 71,000 to 7.237 million.
Although the pool of workers is smaller, so are the number of jobs open. A less competitive job market means less churn. The number of people leaving one job for another is down for a second month in a row and falls 151,000 to 704,000 in May. May is typically a month in which college graduates enter the workforce. New entrants are 24,000 higher in May to 725,000.
Market Consensus Before Announcement
Payrolls expected up 129K in May after 177K in April. The jobless rate expected flat at 4.2 percent. Given all the sturm and drang over tariffs freezing investment and hiring, it would be a pretty good showing.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
