U.S. payrolls increased 139,000 in May, more than expected; unemployment at 4.2%

[Bernardo de La Paz]

28. My view, combing ADP and this report: resilience is fraying at the edges

The labour market has been relatively resilient but it is a combination of less hiring and more stay-put on the part of employees.

The back-looking downward revisions are more believable (more data, more consideration) than the current numbers (quicker but less data). ADP showed a bit of a tick down, but still resilient.

Consider the background when looking forward. Are there many drivers for job growth? Maybe some deregulation, but that is unlikely to affect jobs until 2026. Maybe a rate cut by the Fed, but that is looking more distant, though I expect now there will be several in 2026.

Are there many drivers for job loss? Tariff taxes, tariff uncertainty, legislation uncertainty, increasing deficits, top-heavy stock market overweighted to "magnificent 7" high tech stocks, looming government "deferred resignations" kicking in come September, tourism declines kicking in this summer, supply shortages possible (rare earth magnets), ....

Where did jobs grow and decline in the report? Healthcare and "hospitality" grew. It seems there are lots of restaurants opening. That's before the summer tourism season which is not looking healthy.

Where did jobs decline? Manufacturing down 8,000 and a couple other key sectors down.

Fraying at the edges, with little positive forward-looking.