May Nonfarm Payrolls

May Nonfarm Payrolls
Updated: 06-Jun-25 09:27 ET

Highlights

The May Employment Situation Report easily surpassed the market's worst fears, as nonfarm payrolls came in slightly ahead of expectations, the unemployment rate held steady at 4.2%, and average hourly earnings rose 0.4%, which translated into a decent 3.9% yr/yr growth rate.

Key Factors

May nonfarm payrolls increased by 139,000 (Briefing.com consensus: 130,000). The 3-month average for total nonfarm payrolls increased to 135,000 from 123,000. April nonfarm payrolls revised to 147,000 from 177,000. March nonfarm payrolls revised to 120,000 from 185,000.
May private sector payrolls increased by 140,000 (Briefing.com consensus: 123,000). April private sector payrolls revised to 146,000 from 167,000. March private sector payrolls revised to 114,000 from 170,000.
May unemployment rate was 4.2% (Briefing.com consensus: 4.2%) versus 4.2% in April. Persons unemployed for 27 weeks or more accounted for 20.4% of the unemployed versus 23.5% in April. The U6 unemployment rate, which accounts for unemployed and underemployed workers, held steady at 7.8%.
May average hourly earnings were up 0.4% (Briefing.com consensus: 0.3%) versus 0.2% in April. Over the last 12 months, average hourly earnings have risen 3.9% versus an upwardly revised 3.9% (from 3.8%) for the 12 months ending in April.
The average workweek in May was 34.3 hours (Briefing.com consensus: 34.3) versus 34.3 hours in April. Manufacturing workweek was little changed at 40.1 hours. Factory overtime was unchanged at 2.9 hours.
The labor force participation rate decreased to 62.4% from 62.6%.
The employment-population ratio decreased to 59.7% from 60.0%.

Big Picture

This is an important body of hard economic data that, overall, suggests the economy is still on solid footing despite the volatility of the stock market and the tariff uncertainty. The most important takeaway is that the combination of the low unemployment rate and higher-than-expected average hourly earnings growth, which follows a robust 0.8% increase in personal income in April, will keep consumers on a spending path and the economy on a growth trajectory. Notwithstanding the fact that this report should also keep any rate cut by the Fed on hold, this is a report that the stock market should be cheering because it is a good economic report that is good for earnings prospects.