by Calculated Risk on 6/05/2025 01:00:00 PM
On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for 130,000 jobs added, and for the unemployment rate to be unchanged at 4.2%. There were 177,000 jobs added in April, and the unemployment rate was at 4.2%.
From Goldman Sachs:
While the employment component of the ISM services index improved, it remained at a weak level and the ADP measure of job growth was much weaker than expected. We have lowered our forecast for nonfarm payroll growth by 15k to +110k, below consensus of +126k.
emphasis added
From BofA:
Payrolls are likely to rise by a stable 150k after coming in at 177k in April. This is slightly
higher than consensus expectations of 130k. Claims in the survey week remained at
muted levels. Firms likely paused the hiring of trade & transportation workers after the
front-loading driven increase in the previous months. But given elevated uncertainty
about the steady state on tariff policy, we don’t think they would have already started
shedding workers. Risks are to the downside, in our view. We expect the u-rate to remain
at 4.2%.
• ADP Report: The ADP employment report showed 37,000 private sector jobs were added in May. This was well below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn’t been very useful in forecasting the BLS report.
• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires). The ISM® manufacturing employment index was at 46.8%, up from 46.5% the previous month. This would suggest some jobs lost in manufacturing. The ADP report indicated 3,000 manufacturing jobs lost in May.
The ISM® services employment index was at 50.7%, up from 49.0% the previous month. This is still weak, but would suggest some jobs added in services. The ADP report indicated 36,000 service jobs added in May.
• Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 226,000 in May compared to 216,000 in April. This suggests layoffs in May were about the same or a little more than in April.
• Conclusion: Over the last year, employment gains averaged 157 thousand per month – and that was probably the trend prior to policy changes. It still seems early for policy to significantly impact the employment report. However, my guess is we will start to see the impact of policy uncertainty – a little hiring hesitancy – and I’ll take the under for May.
