U.S. Labor Market Slows Despite Job Gains in May

The U.S. labor market added 139,000 jobs in May 2025, slightly exceeding expectations but continuing a trend of slower hiring. The unemployment rate remained at 4.2%, while average hourly wages increased by 0.4% monthly and 3.9% annually. Health care and hospitality sectors posted notable gains, but manufacturing lost 8,000 jobs and the federal government shed 22,000 positions due to President Trump's hiring freezes and tariff policies. The labor force participation rate dropped by over 625,000, the largest decline since 2023, and the employment-population ratio also decreased, highlighting underlying labor market weaknesses. Despite these mixed signals, the job market is seen as resilient, with financial markets responding positively. The Federal Reserve is expected to keep interest rates unchanged as experts forecast further labor market softening in the coming months.