The unemployment rate is a measure of the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. It’s a key indicator of the health of the labor market and the economy. For example, an unemployment rate of 4.2% means that 4.2% of the people who are able and willing to work are currently without a job.
Nonfarm payrolls refer to the total number of paid workers in the U.S. excluding farm employees, government employees, private household employees, and employees of nonprofit organizations. This statistic is reported monthly by the U.S. Bureau of Labor Statistics and is a critical indicator of economic health. An increase in nonfarm payrolls typically signals economic growth and means more jobs creation.
Employment Situation – May 2025
The U.S. economy added 139,000 jobs in May, slightly exceeding forecasts, while the unemployment rate remained unchanged at 4.2%, consistent with the range observed over the past year. Employment growth was notable in health care, leisure and hospitality, and social assistance, while federal government jobs continued to decline, shedding 22,000 positions.
Household Survey Data
- The unemployment rate held steady at 4.2%, with 7.2 million unemployed people, reflecting little change from previous months.
- The number of short-term unemployed (less than 5 weeks) increased by 264,000, while long-term unemployed (27+ weeks) decreased by 218,000 to 1.5 million, representing 20.4% of total unemployed individuals.
- The employment-population ratio fell to 59.7%, and the labor force participation rate declined slightly to 62.4%, suggesting a minor shift in workforce engagement.
- The number of people employed part-time for economic reasons held steady at 4.6 million, indicating continued underemployment.
Establishment Survey Data
- Total nonfarm payroll employment increased by 139,000, in line with the 149,000 monthly average over the past year.
- Health care added 62,000 jobs, surpassing previous monthly averages, with gains in hospitals (+30,000), ambulatory health care services (+29,000), and skilled nursing care facilities (+6,000).
- Leisure and hospitality continued its upward trend (+48,000), with food services and drinking places accounting for +30,000.
- Social assistance employment increased by 16,000, mainly in individual and family services.
- Federal government jobs declined by 22,000, with a total loss of 59,000 jobs since January, continuing a downward trend.
- Other industries, including mining, construction, manufacturing, retail trade, transportation, financial activities, and professional services, saw little or no change in employment.
Wages and Work Hours
- Average hourly earnings rose by 15 cents (+0.4%) to $36.24, marking a 3.9% increase over the past year.
- Average hourly earnings for production and nonsupervisory employees rose by 12 cents to $31.18.
- The average workweek remained at 34.3 hours, consistent with prior months, while manufacturing overtime held at 2.9 hours.
Impacts of Report on Stock Market
The job market remains stable, with steady employment growth, particularly in health care and service industries. However, ongoing reductions in government jobs and changes in export regulations could introduce challenges in the coming months.
While hiring continues, labor force participation remains relatively low, indicating that some individuals are not actively engaged in the workforce.
Wage growth has been consistent but still lags behind inflation, meaning workers are seeing moderate improvements in earnings but not enough to fully offset rising costs.
Overall, employment trends show modest progress, and this resilience in the labor market contributed to a slight increase in the S&P 500, as investors reacted positively to the steady job data.
