The labor market continues to grow despite tariff pressure and the threat of a slowdown.
The US economy added 139,000 new jobs in May, exceeding analysts' forecasts of 125,000, according to data from the Bureau of Labor Statistics released on Friday.
Although the final figure for April was revised down from 175,000 to 147,000, the May statistics confirm that businesses are still hiring despite rising tariffs and a weak economic backdrop.
Unemployment remains steady at 4.2%, and wages are growing faster than expected.
The unemployment rate remained at 4.2%, as it was in April. However, wages showed growth. Average hourly earnings increased by 0.4% month-on-month and by 3.9% year-on-year, exceeding expectations (0.3% and 3.7% respectively).
Even despite the cautious sentiment in business, Americans started earning a little more than economists had predicted.
The medical sector is growing, while the government sector is shrinking.
The main driver of employment is healthcare, where 62,000 jobs were created. This is significantly above the 12-month average of 44,000. The tourism and leisure sectors (+48,000) and social assistance (+16,000) also saw growth.
Meanwhile, the federal government cut 22,000 jobs. The reason is the workforce reform promoted by the administration of Donald Trump, including through the Ministry of Efficiency led by Elon Musk. This is the first reflection of their policy in the official employment statistics.
Currency markets: the dollar strengthened slightly, while the euro and pound lost ground.
Against the backdrop of the report publication, the dollar strengthened moderately:
The dollar index rose to 98.9, but is still down 0.5% for the week.
The yen weakened by 0.35% to 144.12.
The Swiss franc fell to 0.82.
The British pound lost 0.18% to $1.35, although it is still up 0.6% since the beginning of the week.
The euro rose temporarily after ECB comments hinting at tightening but then fell to $1.1423, losing 0.18%.
Expectations for interest rates are changing again.
The market is still pricing in at least one rate cut by the Fed of 25 basis points by the end of the year, but some participants have started to expect two cuts.
The chief economist of Deutsche Bank, Mark Wall, noted that it is too early to assess the impact of trade wars, and the conflict itself remains 'extremely unpredictable.' According to his forecast, the ECB may lower rates by a total of 50 basis points.
The situation in Germany is worsening.
In April, Germany's exports and industrial production fell more than expected. This has become a worrying signal. The economy of the largest EU country is losing momentum. Reasons include global slowdown and unresolved trade conflicts. There are currently no signs of buyer activity for recovery.
A small spike in the currency markets occurred on Thursday evening. Donald Trump had a phone conversation with Chinese President Xi Jinping that lasted more than an hour. Investors reacted quickly: the dollar weakened, and riskier currencies rose.
