The labor market persevered in May, continuing a consistent run of job creation that has outlasted inflation, interest rate increases, and now an on-again-off-again trade war.
Employers added 139,000 jobs last month, the Labor Department reported Friday, about in line with economists’ expectations. The unemployment rate remained steady at 4.2 percent.
The steady hiring is an indication that businesses are still seeing enough demand for goods and services that they will fill open roles and add new ones, even if they’re no longer expanding as quickly as they had over the past few years.
And the latest numbers suggest that uncertainty around President Trump’s economic policies hasn’t yet done substantial damage to the labor market.
Back in balance: The supply of unemployed workers has lately come back into line with the number of open jobs, after spiking to about two jobs for every available worker in mid-2022.
Pink slips creeping up: Initial claims for unemployment insurance, seen as a proxy for layoffs, have been slowly rising. But they’re not at worrying levels, as companies seem to be holding on to their workers.
Bad mood rising: Consumer and business sentiment has taken a dive in the past few months, coinciding with Mr. Trump’s ever-changing tariff policy. Such vibes can translate into weaker spending and hiring, but don’t always.
Perhaps reflecting seasonality, leisure and hospitality added 48,000 jobs, well above the average of 20,000 a month over the previous year.
The number of new jobs created in May slowed to 139,000, a sign the Trump trade wars are starting to make a dent in a resilient U.S. labor market that’s been a bedrock of the economy.
The economy also added 95,000 fewer jobs in April and March than originally reported, the government said Friday. That’s when the trade wars began to flare up in fits and starts.
The soft increase in hiring in the spring is not enough to persuade the Federal Reserve to cut interest rates soon, but a few more weak readings could be enough to do the trick, economists say.
Economists polled by The Wall Street Journal had forecast a 125,000 increase in new jobs last month.
The U.S. unemployment rate, meanwhile, was unchanged at 4.2% in May. The jobless rate had held steady between 4% and 4.2% over the past year.
Stocks extended premarket gains after the report. U.S. interest rates were little changed.
The Canadian economy eked out minor job gains, and the unemployment rate rose for a third straight month to the highest level since September 2016 outside of the pandemic.
Employment grew by 8,800 positions in May, and the jobless rate increased 0.1 percentage points to 7%, Statistics Canada data showed Friday. The median projection in a Bloomberg survey anticipated 10,000 positions lost.
May is the fourth straight month where the economy either saw very little change in employment or job losses. Since February, the labor market shed a net of 15,300 jobs as a result of firms slowing down hiring, downsizing, or laying off due to US tariffs on Canadian auto, steel, aluminum, and other sectors. The jobless rate jumped 0.4 percentage points over that period.
The report underscores a weakened labor market, affected by the trade war. The Canadian economy needs to create roughly 30,000 jobs a month to keep pace with population growth and hold the unemployment rate steady. Economists in a Bloomberg survey expect joblessness to rise further to 7.2% in the second half of this year.
The data were released at the same time as a US report showed job growth moderated in May, and the prior months were revised lower. The loonie erased losses versus the US dollar and traded at C$1.3673 as of 8:34 a.m. in Ottawa. Canadian bonds slumped across the curve. The two-year Canadian yield rose some four basis points to 2.65%.
Labor force data has been among a handful of indicators flashing warning signs that the economy might be heading for a downturn. Pull-forward activity in exports and inventory buildup fueled economic growth in the first quarter, and consumers rushing to buy cars flattened retail spending data.
The Bank of Canada held its key interest rate at 2.75% for a second straight meeting this week, citing policy uncertainty, elevated core inflation, and unexpectedly robust first-quarter output. However, it’s open to further rate cuts if the economy worsens. The extent to which higher US tariffs hurt employment will be one of its key considerations on the timing for further reduction of borrowing costs.
In May, there were 1.6 million unemployed people, up 13.8% from a year ago, and the statistics agency said people are facing greater difficulties finding work in the current labor market, with the average duration of unemployment rising.
The employment rate — the proportion of the working-age population that’s employed — was unchanged at 60.8%, matching a recent low seen in October last year.
The number of employees in the private sector rose by 61,000, the first increase since January. Public sector employment fell by 32,000, as temporary workers for the April election were let go. Growth in full-time employment of 58,000 was offset by a decrease in part-time work of 49,000.
Employment rose in wholesale and retail trade, recreation, finance and real estate, and utilities. Public administration, accommodation and food services, and transportation and warehousing lost jobs.
Total hours worked were unchanged in May and were up 0.9% from a year earlier.
Employment grew in British Columbia, Nova Scotia, and New Brunswick, and shrank in Quebec, Manitoba, and Prince Edward Island. It was little changed in the other provinces.
Yearly wage growth for permanent employees held steady at 3.5%, versus economists' expectations for a deceleration to 3.2%.
With tariffs swinging markets from highs to lows in hours, it helps to look at other indicators to gauge the state of our economy: home sales, the average weekly hours for manufacturing employees, and how many dolls a little girl is allowed to get for Christmas. Me? I’m watching pizza sales.
For the longest time, pizza has been the go-to dinner order for anyone looking to feed a family fast and on the cheap. What’s often touted as America’s favorite food took on another attribute during the pandemic: safe. Domino’s Pizza Inc., the largest of the delivery chains, and its smaller rival Papa John’s International Inc. each registered double-digit year-over-year same-store sales increases in the US and North America, respectively, in 2020, helped by Covid-19 lockdowns. Pizza Hut finally saw that kind of lift in the first quarter of 2021, by which time inflation had started to bubble up, enhancing the value proposition. In an earnings call that quarter, David Gibbs, chief executive officer of parent Yum! Brands Inc. chalked up the success to several factors, including the “compelling value” of Pizza Hut’s $10 Tastemaker offer—a large pie with any three toppings.
Four years on, though, it looks as if low-income consumers are being priced out of pizza. Those same-store sales were down at all three pizza chains in the first quarter of 2025, declining 5% at Pizza Hut, 2.7% at Papa John’s, and 0.5% at Domino’s. Domino’s did have one metric to celebrate, at least: Takeout ticked up 1%, because, as Chief Financial Officer Sandeep Reddy explained in an earnings call, it costs less than delivery.
Pizza Chains Struggle After Pandemic Peak
Same-store sales, year-over-year change
Source: Bloomberg
Certainly part of pizza’s problem is the proliferation of takeout options made possible by the relentless expansion of delivery services such as Grubhub Inc. and Uber Eats. Also, people have been gravitating toward healthier options generally, which could be denting sales at the chains. But the biggest factor for price-sensitive, low-income consumers—the people who account for so many of the sales at pizza chains—is that the value proposition just isn’t there the way it once was. The average price of a large pizza at the top five chains is now $18.14, and the overall check has jumped nearly 30% since 2019, according to Richard Shank, an analyst at market research firm Technomic. That’s slightly higher than the increases at burger and chicken chains.
Pizza is getting more expensive everywhere, partly because the costs of essential ingredients like tomato paste, as the Wells Fargo Agri-Food Institute says, have been going up. But that hasn’t dampened appetites for a certain cohort of Americans. Pizzerias where the average meal costs $31 to $50 per person saw a 43% increase in the number of diners in the first three months of 2025 from the previous year, according to data from the restaurant reservations app OpenTable.
Prices on the Rise
Change in median restaurant meal price, Q4 2023 to Q4 2024
Source: Datassential
*This category includes primarily fried handheld protein dishes, including tenders, fried shrimp dinner,s and wings.
As Moody’s Analytics pointed out in a report published earlier this year, the top 10% of US households now account for half of all consumer spending, the highest in data going back to 1989. These folks, whose sense of financial security has been bolstered by rising home prices and stock market gains, are the top leg of our “K-shaped economy,” as Bloomberg Intelligence analyst Michael Halen describes it. On the other end are low-income consumers, whose purchasing power has been decimated by the crisis of a higher cost of living without a comparable increase in wealth.
The chains know they need to offer their inflation-fatigued customers more lower-priced options to spur sales. Domino’s expects its loyalty program, revamped in 2023 to better serve takeout customers, to get “light users” coming in more frequently, Reddy said in the recent earnings call. Papa John’s is pushing its Papa Pairings, a value menu offering two or more items for $6.99 each. Pizza Hut has a $7 Deal Lover’s menu and a discounted carry-out, large, single-topping pizza for $9.99—but most of its large pizzas cost at least double that.
The supermarket tells a similar story. Look at Nestlé SA, which at an investor presentation earlier this year called the category one of its “underperformers” and largely blamed overly aggressive pricing. In response, the company brought 95% of its frozen pizza portfolio, which includes brands like Tombstone, Jack’s, and DiGiorno, back down into the $4-$6 range. A few months later, though, the company launched its more expensive alternative: DiGiorno Wood Fired Style Crust Pizza for $6.49. “The new launch capitalizes on the continued trend toward premiumization across the category,” a company spokesperson told Bloomberg Businessweek.
Yet in a sign of just how little some consumers will spend, of the top 20 brands, the one posting the biggest gains, in both dollars and units, was Tony’s Pizza, which sells pies for four for $4 or less, according to data from market researcher Circana LLC for the 52 weeks ended April 20.
Still, there are signs that the general economic uncertainty could be taking a toll on the wealthy, as well. There has also been an increase in homemade pizza making, according to Circana analyst David Portalatin, even though on average, refrigerated pies and pizza kits cost more than the frozen kind. But prices in that category are down per unit by nearly 19% in that period, according to Circana.
Among independent pizzerias, the once ubiquitous dollar slice is becoming elusive, but for the restaurants that cater to consumers in the top leg of the K, things are still looking up. Slices and pies are more expensive than they once were, but customers understand they’re paying a higher price for a better product, often made with imported flours, tomatoes, and cheeses, says Scott Wiener, who’s been leading pizza tours of New York City for more than 15 years. At Lucia on New York City’s Upper East Side, pies range from $29 for a plain one to $58 for a vodka pepperoni Sicilian.
All of that gently ground flour and buffalo mozzarella straight from Italy are right in the trade war’s line of fire, says Fred Mortati, the proprietor of high-end pizza ingredient importer Orlando Foods. Between President Donald Trump’s 10% global tariff and the subsequent weakening of the US dollar, Mortati says his costs “increased effectively overnight by 20%.” He says he has no choice but to pass the increases along to his customers. Mortati expects pizza shops to raise their prices from 2% to 5% based on food costs alone, and he’s not sure everyone will be so understanding. “Consumers are tired of seeing inflationary pressure, unfortunately,” he says.
That could become true for the people who spend $60 on a pizza, too.
“I think we’re seeing a softening in the labor market, I think that’s undeniable, but it’s not a retrenchment in the labor market, and that’s what was feared,” EY chief economist @GregDaco says. pic.twitter.com/FVhas6tVA7
— Yahoo Finance (@YahooFinance) June 6, 2025