Payrolls overall remain solid but worrying signs are emerging
The US economy is being rocked by some major shocks emanating from the Trump administration: DOGE cuts of federal workers and research grants, higher tariffs (which also bounce around from day to day), actions against immigrants (even legal ones), bond market fears of rising deficits from the One Big Beautiful Bill…
But how does all of this impact the job market?
On the surface, the market seems pretty steady. According to the new Bureau of Labor Statistics jobs report for May, payrolls grew at a rate of 139,000 — a bit down from earlier months but still pretty solid. The unemployment rate also remained at 4.2 percent.
But, beneath the headline numbers, there are signs in the jobs data of a weakening market — and one that Trump’s actions are affecting in modest but meaningful ways.
On the payroll side, almost all of the job growth occurred in two sectors: health care and leisure/hospitality, which together accounted for 80 percent of all new jobs. Employment modestly declined in professional services (especially the scientific research sector), retail trade and federal employment; indeed, federal jobs are down by 59,000 since February, and more such declines are coming as more workers who are now on administrative leave or severance pay show up as unemployed.
