Insights 
VT 
The US jobs report for May 2025 shows an increase of 139,000 in non-farm payrolls for April, surpassing the expected 130,000. The previous month’s figure was revised down from 177,000 to 147,000. The two-month net revision indicates a decrease of 95,000 jobs, compared to a previously reported 58,000 reduction.
The unemployment rate held steady at 4.2%, aligning with predictions, with the unrounded rate at 4.244%. The participation rate decreased to 62.4%, down from 62.6%. Average hourly earnings rose by 0.4% month-over-month, exceeding the anticipated 0.3%, and year-over-year earnings increased by 3.9%, above the 3.7% expectation. Average weekly hours remained consistent at 34.3.
Private Payrolls And Job Sector Changes
Private payrolls increased by 140,000, outpacing the expected 120,000, while manufacturing payrolls saw a slight gain. Government jobs fell by 1,000, down from a gain of 10,000 previously. Full-time employment decreased by 623,000, and part-time jobs rose by 33,000, less than prior months.
USD/JPY traded at 144.26 before the data release. Market expectations for easing adjusted from 80 to 79 basis points. Despite job growth, participation rate concerns suggest potential economic issues. Healthcare added 62,000 jobs, with leisure and social assistance also contributing. The federal government lost 22,000 jobs.
The data presented reflect a US employment picture that is somewhat mixed when taken apart, even if headline payrolls notched a modest upside surprise. The core figure – a gain of 139,000 non-farm jobs in April – exceeded the median estimate by a fair margin. However, when we look behind that headline and factor in downward revisions from the previous two months, the net gain diminishes substantially. The adjusted numbers suggest the labour market added considerably fewer positions over the past quarter than initially believed – a detail not to be dismissed when formulating forward expectations.
Unemployment held firm at 4.2%, which on the surface might seem stable, but the decline in the participation rate to 62.4% paints a more complex picture. Fewer people are either working or actively seeking work. At the same time, we observed an acceleration in hourly earnings – 0.4% on the month and 3.9% year-on-year – which is a faster pace than economists had pencilled in. This points to underlying wage pressures, somewhat out of step with the moderation suggested by other employment data.
Financial Markets And Employment Data Interpretation
Interestingly, weekly hours stayed unchanged, and full-time employment fell sharply by over 600,000, while only a marginal increase was recorded in part-time positions. This implies a quiet underlying softness – employers perhaps hesitating to commit to full-time staffing. Moreover, payroll gains came largely from healthcare and social assistance, notably sectors typically less sensitive to the wider economic cycle, while government payrolls went into reverse. The federal job losses, especially the 22,000 contraction, warrant attention.
From the perspective of rate-sensitive instruments, this mix sends a conflicting signal. The debt markets briefly pared back rate cut bets following the print, albeit by just one basis point. That movement may seem trivial, but it’s important – it implies how tightly the pricing around monetary policy is currently wound. The modest payroll beat was not sufficient to shift expectations meaningfully, perhaps due to the downtick in labour force participation and the glaring drop in full-time employment. The dollar index firmed up slightly following the release, while USD/JPY edged into the mid-144 handle, reflecting a minor adjustment but nothing structural.
For positioning, it suggests we need to stay attuned not just to payroll figures in isolation, but also to how they coalesce with participation and wage dynamics. Reduced participation, in tandem with solid wage growth, could keep service inflation stickier than desired by monetary authorities – even if aggregate jobs come in soft.
It’s that tension we should be watching. Markets arguably want cleaner signals, but the labour market isn’t offering them. We’ve now got a chart that tells two stories: growth continues, but perhaps not as convincingly as it did earlier this year. Wages keep pushing forward, while overall job quality – at least as defined by full-time versus part-time – gives off warning signs.
Derivative pricing needs to factor in that hesitation. Coming weeks will likely centre around upcoming inflation reads, but employment data, particularly shifts in full-time numbers and wage trends, will weigh almost as heavily. If short-term rates remain sensitive to such mixed indicators, modest deviation from expectations could stir bids or cuts across the entire curve, so staying nimble matters now more than ever.
It isn’t about one strong figure or one weak one; it’s the composition that’s beginning to matter more. Strip out sectors such as healthcare or government, and what’s left may feel lighter than headline payrolls suggest. Traders positioning around rate announcements shouldn’t assume resilience by default. The tape isn’t bleak, but it isn’t as solid as last year’s trend either.
And, as we’ve seen, the Fed does not operate on payrolls alone – broader participation measures and wage pressures are beginning to matter more in the macro assessment.
