Celebrate weak US Job Reports ? Dun think so !
Last week (June 02 - 06) was all about jobs.
The 3 major jobs reports were released consecutively from Wednesday to Friday, and US market reacted accordingly.
But what is truly the bigger picture, read to the end to find out!
Private Sector Employment.
On Wed, 04 Jun 2025, the major economic news of the day was ADP’s private sector employment report.
It saw the US economy add only 37,000 jobs in May - a low number, spurred fears that ongoing trade war may finally be starting to affect US economy’s hard data. (see below)
The May 2025 private sector jobs report cast a shadow on the health of the US economy. Its weakness could be a signal to US central bank as they prepare to convene on June 17-18.
The May data was far below analysts’ expectations of around 110,000 jobs and April’s number that had been revised down to 60,000.
The pace of hiring was the lowest level seen since March 2023, ADP reported.
Is the drop in ADP’s May jobs numbers just a small hiccup after recent problems, or is it the beginning of a bigger & longer-lasting decline?
Note Worthy.
On the same day, the Fed’s Beige Book report showed "comments about uncertainty delaying hiring were widespread".
It noted that:
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All districts described lower labour demand.
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Citation of declining hours worked and overtime.
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Hiring pauses.
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Staff reduction plans.
The report also mentioned some districts reported layoffs in certain sectors and that "these layoffs, fortunately were not pervasive".
US Jobless Claims.
(1) Weekly new jobless claims.
On Thu, 05 Jun 2025, the number of Americans filing new applications for unemployment benefits increased to a 7th-month high for week ending 31 May 2025.
This pointed to a softening labour market conditions amid mounting economic headwinds from tariffs. (see below)
Jobless claims rose +8,000 to a seasonally adjusted 247,000 for the week.
It is the highest level since October 2024. Economists polled by Reuters had forecast 235,000 claims for the latest week.
Thursday report also continued to show workers who lost their jobs have a tough time landing new jobs.
This as uncertainty caused by President Donald Trump's aggressive trade policy leaves employers reluctant to increase headcount.
(2) Continuing Jobless Claims.
I am more inclined to look at this report vs weekly jobless claims for a more “complete” picture of US labour market as its longer-term readings is more reflective of the labour market situation.
For week ending 24 May 2025, number of people who continue to receive jobless claims has slipped -3,000 to a seasonally adjusted 1.904 million. (see above)
At first glance, it looks as if it is a relief.
Continuous claims slowly rises from March 2025 to June 2025
However, if we looked at US Continuing claims for the past 3 months (March to May), continuing jobless claims have actually increased overtime:
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On 06 Mar 2025, continuous claims were hovering around 1.897 million.
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By the time 24 May 2024 readings were out, it has risen to 1.904 million.
The elevation in the so-called continuing claims aligns with consumers' fading confidence in US labour market.
US Non-farm Payroll.
Jobs data decidedly took a turn for the “better” on Friday.
On 06 Jun 2025, US Non-farm payroll jobs report for May 2025, showed the US labour market remained largely resilient, amid President Trump's new tariff policy.
US economy added 139,000 nonfarm payrolls in May, more than the 126,000 estimates expected by economists. (see above)
In April 2025, the US economy added 177,000 jobs. This figure was revised lower on Friday to reflect that the economy added only 147,000 jobs that month.
Revisions from March and April showed the US labor market added 95,000 fewer jobs than initially thought.
According to EY, Chief economist, Gregory Daco, US labour market is slowing down. However, it is not shrinking, that was the main concern.,
Pantheon Macroeconomics, Snr US economist, Olivier Allen echoed similar sentiments - "A gradual but genuine slackening of US labour market is underway”.
Unemployment Rate.
Meanwhile, unemployment rate remained status quo at 4.2%. (see below)
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Despite the uncertainties brought about by Trump’s tariffs, US labour market remained resilient in the face of rising continuing jobless claims.
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This data, together with non-farm payroll might just be the excuse that Jerome Powell will leverage to maintain interest rate as is for June 2025, while focusing on the Fed’s other mandate (inflation).
Friday Rally Valid?
Morningstar has presented US market 2025 YTD’s performance. (see above)
Last Friday’s market optimism over a weak set of jobs reports is the hardly time for celebration (to me).
Morgan Stanley (MS), Wealth division, Lisa Shalett best summed it up as:
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Equity complacency remains the biggest risk in US markets.
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US equity investors continue to behave as if the glass is half full, despite (a) tariff and tax policy uncertainty and (b) warnings from other markets, notably global long rates.
The other reason why I doubted Friday’s rally is because of recent news on US Tech giants laying off workers.
I am only looking at layoff since April 2025 - present. (see below)
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Mega cap companies like $Alphabet(GOOG)$, $Intel(INTC)$, $Microsoft(MSFT)$, $Amazon.com(AMZN)$ etc…have all laid off staff.
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It was reported that some of the jobs will be taken over by agentic AI.
Below is a summary of what have been mentioned above except for $Meta Platforms, Inc.(META)$ whose layoff exercise started earlier in Jan & Feb 2025.
It is evident that these US companies are trimming off the fats, keeping the company as lean as possible as the effects of Trump’s tariffs are set to take form from H2 2025 onwards.
This would be consistent with behaviour exhibited by investment gurus like Michael Burry, Stanley Druckenmiller, Bill Ackman who have been pivoting their portfolios, (click on the names for details from my other posts).
Did their years of (investing) experience help them see something that retail investors (like me) have failed to notice?
Don’t miss out my other picked posts for Friday & Monday - see below ! Help to Repost & share so that more will come to know ok. Thanks.
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
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Bessent vs Dimon: US Economy / Market Showdown ! My Mon, 09 June Picked post !
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Semicon's Next Move Post-NVDA earnings. My Friday, 06 June Picked post !
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Goldman says Sell AAPL and NVDA. For real ? My Friday, 06 June Picked post !
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Do you think US jobs market reports delivered a strong set of numbers in May 2025?
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Do you think US market will continue to really on the 2nd week of June 2025’?
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