The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Lead Economist Daniel Zhao.

The job market continues to stand tall as headwinds from President Trump's tariffs start to blow. It's still too soon for tariffs to show up in job market data and that's reiterated in today's jobs report which shows only modestly slower jobs growth. Tariff impacts will likely show up later in the year, but in the interim, the job market is waiting for the other shoe to drop.

The early impacts of tariffs are just one drag on the job market. A bevy of other headwinds are accumulating including federal layoffs and funding cuts, slowing immigration and revocation of TPS work authorization, high interest rates, and more. While each alone would be too small to cause a recession, the combination of headwinds risks decelerating the job market just before the full weight of the tariff shock arrives.

Key stats:

Leafing through the Beige Book

The May Beige Book from the Federal Reserve highlights the disruptions that new tariffs are causing for American businesses—some positive, some negative. The anecdotes within the Beige Book help paint the picture for the May jobs report by industry:

Transportation and warehousing

For example, the Atlanta Fed noted:

Some logistics contacts indicated that warehouses remained relatively full as firms had pulled ahead inventories in the first quarter … Contacts expressed concerns about a dearth of capacity over the short term in rail, warehousing, trucking, on ships and at ports, as a surge in imports is expected amid the pause on higher tariffs on Chinese goods.

Tariff frontrunning initiated a surge in activity that is still wending its way through the supply chain, keeping demand for warehousing and delivery high though the peak of tariff frontrunning activity may be behind us. In May, couriers & messengers added 6,500 jobs while warehousing & storage lost 5,100 jobs.

Manufacturing

Similarly, the short-term impact from manufacturing is also mixed. While fully reshoring supply chains will take many years, the Cleveland Fed’s section of the Beige Book noted that some domestic manufacturers were already seeing an immediate increase in demand from firms trying to reshore their supply chains or even just to circumvent tariffs in the short-term.

… a small number of manufacturers reported higher orders from customers that were seeking domestic substitutions for imported products. Some of these customers were looking to avoid import tariffs or stabilize their input prices, while others were aiming to find domestic substitutions for imported products that were being held at ports temporarily during trade negotiations.

The Richmond Fed notes the other side of the equation though, with higher input costs, retaliatory tariffs and general uncertainty leading to diminishing domestic production and manufacturing employment.

A multinational machine manufacturer shut down a domestic product line that sold internationally due to tariffs on exports. A small food manufacturer laid off a full-time employee due to uncertainty about future input costs. A furniture manufacturer reduced the average work week to four days.

On net, these massive disruptions resulted in a slight job loss in May as manufacturing lost 8,000 jobs. The best case scenario for tariffs reviving American manufacturing will take many years to play out, and in the short-run, tariffs are likely acting as a drag on manufacturing employment. 

Leisure and hospitality

Consumer spending has held up well despite plummeting sentiment. Leisure and hospitality is largely discretionary spending so it may be an area where impacts from a weakening economy and from the U.S’s. reputation abroad may show up more quickly. 

The Atlanta Fed noted declining international tourism but perhaps offset by higher-income domestic travel.

Contacts reported a slowing of international travelers to the U.S., and while previously concentrated among Canadian visitors, the slowdown recently expanded to visitors from Asia and Europe. Domestic leisure travel was flat. Declining consumer confidence slowed leisure travel for lower income consumers but also caused more higher-income Americans to vacation in the U.S. instead of abroad. Business travel was down slightly as government agencies and contractors restricted travel.

In the May jobs report, leisure & hospitality added 48,000 jobs, despite the early Easter shifting jobs into April. Gains were more concentrated in food services & drinking places (+30,200 jobs) than accommodation (+1,200 jobs), which may point to strong local consumer spending even if travel and tourism are more muted.

More charts

Payroll employment grew 139,000 in May. April and March were revised downward by 95,000 in sum. Jobs growth has held up at a moderately healthy rate despite the bevy of headwinds that the job market faces between tariffs, uncertainty, federal layoffs/funding cuts, the immigration crackdown, and more.

The most obvious place these headwinds are showing up is federal jobs which shrank by 22,000 (15,800 if you exclude the U.S. Postal Service). Post-Covid, federal jobs growth had been tracking around the same rate as private jobs growth, but federal jobs growth has now fallen below private jobs growth. This is likely to continue as the federal hiring freeze, further layoffs, and buyouts shrink the federal workforce.

Private education & health services and leisure & hospitality kept jobs growth strong in May, adding 135,000 jobs in sum. Manufacturing lost 8,000 jobs as tariffs disrupt supply chains. Transportation & warehousing added 5,800 jobs, though the peak of tariff frontrunning activity may be past.

Zooming out, despite the strength in leisure & hospitality, education and health care, those sectors all slowed from H2 2024 to H1 2025. Government jobs also are at risk of flipping to a drag on jobs growth if state & local government hiring slows enough that it can't offset the shrinking federal workforce.

Average hourly earnings grew 3.9% year-over-year, the same rate as in April. Wage growth has stabilized near this level for about a year now.

The unemployment rate held flat at 4.2%, continuing to stay on the 4-4.2% plateau that it's been at over the last year. Labor force participation dropped slightly to 62.4% from 62.6%. Employment in the household survey dropped by 696,000, a sharp disagreement with the establishment survey. These two surveys may disagree on a month-to-month basis, so it will be important to see if the household survey deteriorates further in coming months.

The prime-age labor participation rate slipped in May to 83.4% from 83.6%. Similarly, the prime-age employment-population ratio fell to 80.5% from 80.7%. Both remain a touch below recent peaks but point to some softening despite the flat unemployment rate.

To speak with Daniel Zhao about this report, please contact pr@glassdoor.com.