U.S. nonfarm payrolls increased by 139,000 jobs in May, slightly above the consensus forecast of a 130,000 gain. However, this was down from a downwardly revised 147,000 in April (originally reported as 177,000). The unemployment rate remained unchanged at 4.2% last month.

The closely watched employment report indicates that job growth slowed in May, amid growing uncertainty around tariffs. This softer labor market data is likely to ease pressure on the Federal Reserve to cut interest rates in the immediate future.

Economists estimate the U.S. economy needs to add roughly 100,000 jobs per month to keep pace with the growth of the working-age population. However, that threshold could decline due to immigration policy shifts—specifically, President Donald Trump’s decision to revoke the temporary legal status of hundreds of thousands of migrants as part of a broader immigration crackdown.

Much of the job growth seen this year has been attributed to “labor hoarding,” with businesses holding onto workers despite uncertainty. Economists suggest this behavior stems from Trump’s unpredictable tariff policies, which have disrupted business planning and strategy.

Adding to the uncertainty for businesses is political opposition to Trump’s tax-cut and spending legislation, coming not only from hardline conservative Republicans in the U.S. Senate but also from high-profile critics like billionaire Elon Musk.

Given these dynamics, employers’ reluctance to lay off workers may prompt the Federal Reserve to remain on hold through the rest of the year. Financial markets currently expect the Fed to keep its benchmark overnight interest rate steady at 4.25%-4.50% this month, with a potential resumption of policy easing anticipated in September.