May Employment Report Expected to Show 125,000 Job Gains, Unemployment Rate Steady at 4.2%

The upcoming May employment report is anticipated to reveal a slowdown in hiring activities, with the unemployment rate expected to remain steady. This report comes at a time when investors are closely monitoring signs of further slowing in the U.S. labor market. The Bureau of Labor Statistics is set to release the data on Friday evening, with economists predicting that non-farm payrolls will increase by 125,000 jobs, while the unemployment rate is expected to hold steady at 4.2%.

In April, the U.S. economy added 177,000 jobs, and the unemployment rate remained unchanged at 4.2%. Recent data has already indicated a slowing job market. On Wednesday, ADP data showed that the private sector added only 37,000 jobs in May, the lowest monthly increase in over two years. On Thursday, the number of initial jobless claims rose to its highest level since October 2024, while the number of continuing claims hovered near a four-year high.

Economists are closely watching these developments, as the employment report is a crucial indicator of the economy's health. The data will influence decisions by the Federal Reserve and other policymakers regarding monetary policy and economic stimulus measures. The report is scheduled to be released on Friday, June 6, and market participants are bracing for potential volatility in response to the numbers.

Nancy Vanden Houten, chief economist at Oxford Economics, noted in a report to clients that the latest jobless claims data suggests a loosening labor market, with rising initial claims indicating potential increases in layoffs and high continuing claims showing that unemployed individuals are struggling to find new jobs. Some economists predict that the May report will reflect the cooling trends seen in other labor market data.

Lyda Boussour, senior economist at EY, wrote in a preview note that the May employment report may indicate a slowdown in labor market dynamics due to high policy uncertainty, tariffs, and reduced immigration inflows. As concerns about further slowing in the labor market grow, Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, told clients in a weekly research report that if the data meets expectations, "given the clear risk of weak data, this would be a mild positive for U.S. equities."