Wall Street Shifts Focus to Labor Market
President Trump’s trade and tariff disputes have generated a lot of concern on Wall Street. One of the areas of greatest anxiety has been the U.S. labor market. Quite simply, if employers aren’t hiring – or worse, they are laying off workers – consumers will be much more hesitant to spend their money. As consumer spending drives roughly two-thirds of our nation’s entire economic growth, a sharp pullback in the labor market could have dire consequences for the health of America’s economy.
Despite the ongoing uncertainty with many of our key global trading partners, the labor market has kept plodding along. As Federal Reserve Governor Adriana Kugler stated on Thursday, “One encouraging sign about economic activity is the resilience of the labor market.” Admittedly, by no means has it been a soaring point of strength. But it also hasn’t collapsed as some on Wall Street had predicted.
On Friday, the U.S. Department of Labor released its monthly Employment Report for May. Last month, the economy added 139,000 new jobs. This was above the 129,000 that Wall Street had forecast but below the 147,000 reported in April. So far in 2025, the economy is averaging a respectable 124,000 new jobs per month. However, this is down from 2024’s average monthly pace of 168,000.
For the third consecutive month, the national unemployment rate was reported at 4.2%. Over the past 12 months, the unemployment rate has hovered between 4% and 4.2%. For the fifth consecutive month, annual wage growth was reported at 3.9%. One year ago, wage growth was slightly higher at 4.1%.
In May, seven of the 11 economic sectors tracked by the Department of Labor reported job gains. The sector posting the largest gain was Education & Health Services, which added 87,000 new jobs. Within that sector, the Health Services industry continues to be a key driver of job growth. Last month, Health Services added 78,300 new jobs, accounting for 63% of the nation’s total gain. So far this year, 57% (350,100) of all jobs added in America have come from the Health Services industry.
On Tuesday, the Department of Labor also reported its latest Job Openings and Labor Turnover Survey (JOLTS) which reports the monthly change in job openings, hires, quits, layoffs and other employee separations. The April survey reports there are 7.39 million unfilled job openings across the nation. This is up 191,000 from the previous month and exceeded Wall Street’s forecast of 7.1 million.
Despite the better-than-expected report, the number of job openings has been gradually declining. Over the past year, the number of unfilled jobs has fallen by 228,000. The survey also indicates that workers are becoming more hesitant to leave their current job. In April, just 2% of workers quit their job, a rate which remains near a five-year low. A low quit rate implies workers are less confident in their ability to find an alternative job.
Overall, employers seem to be fairly adept at maneuvering through Trump’s trade and tariff disputes. However, there are certainly pockets within the economy, such as manufacturing and the retail industry, that have been more heavily impacted than others. The broader challenge is just how long the labor market’s resiliency can last. The longer these disputes persist, the greater the odds that resiliency will be put to the test.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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