6 June 2025
If you are covering the latest employment numbers from the US, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“While today’s numbers from the US were a little better than expected, they do still indicate that a slowdown in the labour market could just be underway with both March and April’s figures downgraded. Following more people than expected moving to unemployment support earlier this week, and a swathe of companies announcing job cuts or hiring freezes, May’s payroll figures indicate that 139,000 jobs were added slightly down from April’s, while the unemployment rate remained steady at 4.2%.
“Tariff uncertainty has already weighed on economic growth with a negative reading in the first quarter, so it would make sense that we would start to see a slowdown in the jobs market too. We continue to wait the outcome of the 90-day pause to reciprocal tariffs, as well as what specific deals with China and the EU look like, and as such we are far from out of the tariff woods just yet. Indeed, with all the talk of tacos – or Trump always chickening out – and some high profile bust ups, Trump has the potential to double down on his trade position and follow through on some of his threats.
“This makes it incredibly difficult for businesses to plan, both in the short-term and the long-term. How long the current unemployment rate can continue to be sustained, therefore, remains to be seen. Watching closely will be the Federal Reserve. It is insistent that the data needs to turn before it can act with any certainty, and as such rate cuts will take a while to come through. Inflation doesn’t appear likely yet to spike just yet as tariff pauses and stockpiling continues to happen. Therefore, more emphasis may be placed on these employment numbers going forward. We may not be there yet, but if a serious weakening happens in the job market, without inflation spiking, the Fed may be left with no option but to cut in the coming months.”
