The U.S. labor market experienced a significant slowdown in May 2025, with private employers adding only 37,000 jobs—the weakest monthly gain since March 2023. This figure, reported by ADP, fell sharply below economists' expectations of 110,000 and marked a substantial decline from April's revised total of 60,000.
ADP's Chief Economist, Nela Richardson, noted, "After a strong start to the year, hiring is losing momentum." Despite the hiring slowdown, wage growth remained steady, with annual pay up 4.5% for job-stayers and 7.0% for job-changers.
The deceleration in job growth coincides with President Donald Trump's implementation of aggressive trade policies, including sweeping tariffs on imports. These measures have introduced uncertainty into the business environment, leading companies to adopt a more cautious approach to hiring. The Institute for Supply Management reported that the U.S. services sector contracted in May for the first time in nearly a year, with businesses citing tariff-related cost increases and planning difficulties.
In response to the disappointing job numbers, President Trump intensified his criticism of Federal Reserve Chairman Jerome Powell, urging immediate interest rate cuts. Trump argued that the Fed's inaction is hindering economic growth, especially as other central banks have already moved to lower rates.
As the labor market shows signs of cooling, attention now turns to the Federal Reserve's upcoming decisions and the potential impact of continued trade tensions on economic growth and employment.