Friday’s jobs report showed the economy adding a strong 172,000 jobs and the unemployment rate holding at a low 4.3%.
The headline numbers were very good overall. Both parties will try to spin the numbers to their advantage.
A look at the details of the Bureau of Labor Statistics data and the trend over recent months can reveal the truth about the health of the economy under President Donald Trump.
The underlying reality
It is helpful to look not just at the most recent month, but at the trend of job growth over the past few months. With upward revisions to the numbers for March and April, the three-month moving average of job gains was 188,000 in May.
That is more than enough to keep up with population growth and to keep unemployment trending down.
Only a few thousand jobs each month are needed, thanks in large part to Trump’s crackdown on illegal immigration.
Because fewer migrants are coming into the country looking for work, fewer people need and are taking jobs.
Conversely, employment rates are high, showing the underlying strength of the labor market.
Prime-age employment, meaning for those between the ages of 25 and 54, has held near all-time highs. It rose in May.
No signs of a recession
The most reliable warning sign for a recession is a fast rise in the unemployment rate. That is not happening.
The unemployment rate, taken from the jobs report’s household survey, is still low by historical standards. It has drifted upward in recent years, but only gradually. It held at 4.3% in May.
Friday’s data suggests that the U.S. labor market is moving away from triggering one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, has signaled the start of all post-war recessions.
The indicator was triggered in mid-2024, but is not signaling a recession right now.
Federal government employment has dropped
The Trump administration’s cuts to the federal workforce have subtracted from overall job growth. But the administration maintains that they help the economy overall.
Federal government employment rose by 1,000 in May. It had been declining in recent months. It plunged in October thanks to the end of the “deferred resignation” promoted by the Trump administration at the end of September. Federal employment is now down about 333,000 since Trump came into office.
But manufacturing employment is down, too
Employment in manufacturing rose by 7,000 in May, adding to a recovery in recent months.
Trump has said that his tariffs will reshore and boost domestic manufacturing. He’s imposed tariffs on China and trading partners around the world, and on steel, aluminum, autos, auto parts, and a number of other goods and services.
So far, though, the sector has lost 68,000 jobs during his time in office.
Leisure and hospitality job growth is off the pre-pandemic trend
The leisure and hospitality sector has, over the past year, exceeded the employment levels it reached in February 2020, right before restaurants and bars were forced to shut down across the country.
The sector added 70,000 jobs in May and is now slightly above its pre-pandemic level of employment. It is well off the pre-pandemic pace of hiring.
Construction job growth has held up
Construction employment rose by 17,000 in May.
Construction is a key sector to watch for signs of trouble in housing. The homebuilding industry has been at risk in recent years because of soaring prices and higher mortgage rates, which have kept some buyers on the sidelines. The sector is also under pressure from Trump’s tariffs and his immigration overhauls.
