Summary

The job market remained strong in May amid concerns it is poised to slow from tariffs, job cuts at government agencies, and weak business and consumer confidence. The Bureau of Labor Statistics (BLS) reported that the U.S. economy generated 139,000 nonfarm jobs in May, almost exactly matching our forecast of 140,000. Consensus was 130,000. April's payrolls were revised lower by 30,000 and March by 65,000. The May result and the revisions reduced the three-month average to 135,000 from 155,000 before the release. The BLS diffusion index indicated 50% of 250 private industries are hiring. The May unemployment rate remained at 4.2%. Average hourly earnings increased 15 cents month to month and are 3.9% higher year over year, a tick higher than our estimate. The average workweek remained at 34.3 hours. Employment continued to trend up in healthcare, leisure and hospitality, and social assistance. Employment showed little change in mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; and other services. The manufacturing sector lost 8,000 jobs. Healthcare added 78,000, while federal government employment fell by 22,000. The decline of 59,000 since January is far below 284,000 federal layoffs announced this year according to outplacement firm Challenger, Gray & Christmas. The BL