Tariff tremors: US adds 139,000 jobs in May even as hiring slows and recession fears grow

Amid rising concern over the economic fallout of President Donald Trump’s sweeping tariffs and federal workforce cuts, US employers added 139,000 jobs in May — a slowdown from the previous month, but still a sign of resilience in a jittery economy.Hiring eased from a revised 147,000 in April, while the unemployment rate held steady at 4.2%, the Labor Department said Friday. The monthly figure undershot expectations and added to the uncertainty surrounding Trump’s evolving trade stance and aggressive policy shifts, AP reported.Trump’s “massive taxes on imports — tariffs — are expected to raise costs for US companies that buy raw materials, equipment and components from overseas and force them to cut back hiring or even lay off workers,” the original AP report noted.

At the same time, Elon Musk’s Department of Government Efficiency (DOGE) has initiated sharp staff cuts and cancelled federal contracts, further clouding the hiring outlook.Still, much of the economic damage hasn’t yet fully emerged in government data. “Any signs of weakness in the data this week would stoke fears of a recession again,” said former Federal Reserve economist Claudia Sahm, now chief economist at New Century Advisors.

“It’s too soon to see the full effects of tariffs, DOGE, or other policies on the labor market; softening now would suggest less resilience to those later effects, raising the odds of a recession.

”Employers have added an average of 144,000 jobs per month so far this year — well below the pace of 168,000 in 2024, 216,000 in 2023, and 380,000 in 2022. In 2021, as the economy rebounded from the COVID-19 shock, monthly job creation had peaked at 603,000.The broader data picture remains mixed. Job openings rose unexpectedly to 7.4 million in April, but layoffs ticked up and fewer workers quit their jobs — a sign of reduced confidence in the labour market. Meanwhile, the number of new unemployment claims hit an eight-month high last week, even as overall levels remain historically low.Trump’s tariff moves — and the erratic way he rolls them out, suspends them and reintroduces new ones — have already left a mark.

The nation’s GDP shrank at a 0.2% annual rate in the first quarter. Imports surged as firms rushed to bring in goods ahead of duties, then plunged 16% in April once tariffs took effect. That sharp decline, said Roosevelt Institute economist Michael Madowitz, could depress jobs in warehousing and logistics.Despite the headwinds, the US economy and labour market have, until now, defied expectations. “Whether it’s the ISM surveys, the ADP figures, or the jobless claims, the tone is clearly one of a weakening economic momentum,” noted Barclays Private Bank strategist Julien Lafargue.