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U.S. job growth slowed in May amid headwinds from tariff uncertainty, while the unemployment rate held steady at 4.2 per cent, potentially giving the Federal Reserve cover to delay resuming interest rate cuts for a while.

Non-farm payrolls increased by 139,000 jobs last month after rising by a downwardly revised 147,000 in April, the Labour Department’s Bureau of Labour Statistics said in its closely watched employment report on Friday.

Economists polled by Reuters had forecast 130,000 jobs added after a previously reported 177,000 rise in April. Estimates ranged from 75,000 to 190,000 jobs. The unemployment rate remained at 4.2 per cent for the third straight month.

The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working age population. That number could decline as President Donald Trump has revoked the temporary legal status of hundreds of thousands of migrants amid an immigration crackdown.

Much of the job growth this year reflects worker hoarding by businesses amid Trump’s flip-flopping on tariffs, which economists say has hampered companies’ ability to plan ahead. Opposition to Trump’s tax-cut and spending bill from hardline conservative Republicans in the U.S. Senate and billionaire Elon Musk adds another layer of uncertainty for businesses.

Employers’ reluctance to lay off workers potentially keeps the U.S. central bank on the sidelines until the end of the year. Financial markets expect the Fed will leave its benchmark overnight interest rate unchanged in the 4.25 per cent to 4.5 per cent range this month, before resuming policy easing in September.

Statistics Canada says the unemployment rate ticked up for the third consecutive month in May as the economy added 8,800 jobs.

The national jobless rate rose to 7 per cent last month, up from 6.9 per cent in April.

Statcan says that marks the highest unemployment rate since 2016 outside the pandemic years.

The wholesale and retail trade sectors were the major contributors to job gains in May, but those were offset by losses in public administration.

Manufacturing, which was hard-hit in April, shed roughly 12,000 jobs last month.

Statcan says there’s been virtually no overall employment growth since January, coming off strong job gains at the end of last year.

Canada’s trade deficit in April widened to an all-time high of a whopping $7.1 billion, data showed on Thursday, as tariffs imposed by President Donald Trump sucked out demand for Canadian goods from the United States.

Its exports to the rest of the world rose, but could not compensate for the drop in exports to the U.S., data from Statistics Canada showed.

Exports to the U.S. shrank by 15.7 per cent, a third consecutive monthly decline, Statscan said, adding that exports south of the border have fallen by over 26 per cent since the peak seen in January.

Analysts polled by Reuters had expected the trade deficit to widen to $1.5-billion for April. Statistics Canada also made a big revision to the trade deficit recorded in March to $2.3-billion from $506-million.

Canada shipped 76 per cent of its total exports to the U.S. last year and the trade between the two countries exceeded a trillion Canadian dollars for a third consecutive year in 2024. But a barrage of tariffs from Trump on Canada and its $90-billion worth of retaliatory tariffs on U.S. imports have started disrupting trade between the two.

Total exports in April plunged by 10.8 per cent to $60.4-billion, the lowest level seen in almost two years, Statscan said. This was the third consecutive monthly decline and the strongest percentage decrease in five years, it said.

While exports to the U.S. led the drop, lower crude oil prices and a stronger Canadian dollar also contributed.

The Canadian dollar was trading up 0.17 per cent to 1.3651 to the U.S. dollar, or 73.25 U.S. cents. Yields on the two-year government bonds were down 0.4 basis points to 2.613 per cent.

Exports to the rest of the world were up 2.9 per cent and in volume terms total exports registered a big decline of 9.1 per cent in April.

The biggest drop in exports came from motor vehicles and parts which lost 17.4 per cent of trade in April from March and was almost entirely attributable to exports of passenger cars and light trucks, which fell 22.9 per cent in April, Statscan said.

Imports were down 3.5 per cent in April to $67.58-billion, but were partly offset by imports of unwrought gold.

Due to the sharp decline in exports to the U.S., Canada’s merchandise trade surplus with the United States narrowed to $3.6-billion, the smallest surplus since December 2020, the statistics agency said.

The deficit with rest of the world marginally increased to $10.7-billion in April from $9-billion in March.

The Bank of Canada held its key interest rate steady at 2.75 per cent for the second consecutive time, citing ongoing trade uncertainty and an economy that continues to chug along.
 
The decision on Wednesday was in line with financial market expectations, which favoured a hold after recent strong-than-expected economic data.
 
“With uncertainty about U.S. tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, governing council decided to hold the policy rate as we gain more information on U.S. trade policy and its impacts,” the central bank said in a news release.
 
The Bank of Canada held its key interest rate in April as well, pointing to the same trade uncertainty that contributed to its decision on Wednesday. The central bank is suggesting that economic data since then hasn’t fuelled urgency for rate cuts.
 
The elimination of the consumer carbon price brought down Canada’s inflation rate in April was 1.7 per cent, however underlying price pressures were firmer, with the central bank’s preferred measures of core inflation up that month. Meanwhile, the economy grew at 2.2 per cent in the first quarter, slightly higher than the Bank of Canada forecast as exports increased ahead of tariffs.

Toy maker Spin Master Corp. TOY-T says it has cut jobs across the company as it tries to weather the impact of global tariffs on its business. 

In an e-mailed statement, spokeswoman Tammy Smitham did not say how many employees were affected. 

She says the layoffs were one part of a multi-pronged plan to deal with the effect of tariffs, which also includes diversifying its supply chains and cutting costs. 

Spin Master said last month that U.S. tariffs on countries where it produces toys, especially China, have made forecasts so challenging that it withdrew its guidance for the remainder of the year. 

The company behind the Hatchimals, Gabby’s Dollhouse and Monster Jam brands has said it aims to drastically reduce its reliance on China for production over the next two years. 

In February, Spin Master said it had decided to wind down a games studio in Sweden as the cost to acquire new users weighed too heavily on revenue. 

U.S. private payrolls increased far less than expected in May, the ADP National Employment Report showed on Wednesday.

Private payrolls increased by only 37,000 jobs last month after a downwardly revised 60,000 rise in April.

Economists polled by Reuters had forecast private employment increasing 110,000 following a previously reported gain of 62,000 in April.

The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the more comprehensive employment report for May due to be released on Friday by the U.S. Labour Department’s Bureau of Labor Statistics. There is no correlation between the ADP and BLS employment reports.

The labour market continues to ease amid economic uncertainty from tariffs. Government data on Tuesday showed there were 1.03 job openings for every unemployed person in April, little changed from March.

Private payrolls likely increased by 120,000 jobs in May after advancing 167,000 in April, a Reuters survey showed. Overall non-farm payrolls are estimated to have increased by 130,000 jobs after rising 177,000 in April.

The unemployment rate is forecast to be unchanged at 4.2 per cent.

Monday June 2

China PMI

Japan and Euro zone manufacturing PMI

(9:30 a.m. ET) Canada’s S&P global manufacturing PMI for May.

(9:45 a.m. ET) U.S. S&P global manufacturing PMI for May.

(10 a.m. ET) U.S. ISM manufacturing PMI for May.

(10 a.m. ET) U.S. construction spending for April.

(1 p.m. ET) U.S. Fed chair Jerome Powell gives opening remarks at International Finance Divisions conference.

Also: U.S. and Canadian auto sales for May

Earnings include: Campbell Soup Co.

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Tuesday June 3

Euro zone CPI and jobless rate

(10 a.m. ET) U.S. factory orders for April.

(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for April.

Earnings include: CrowdStrike Holdings Inc.; Dollar General Corp.; Ferguson Enterprises; Hewlett Packard Enterprise Co.; Snowline Gold Corp.

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Wednesday June 4

Japan and euro zone services and composite PMI

(8:15 a.m. ET) U.S. ADP National Employment Report for May.

(8:30 a.m. ET) Canadian labour productivity for Q1.

(9:30 a.m. ET) Canada’s S&P Global Services PMI for May.

(9:45 a.m. ET) Bank of Canada policy announcement with press conference to follow.

(9:45 a.m. ET) U.S. S&P Global Services/Composite PMI for May.

(10 a.m. ET) U.S. ISM Services PMI for May.

(2 p.m. ET) U.S Beige Book is released.

Earnings include: Descartes Systems Group Inc.; Dollar Tree Inc.; GameStop Corp.; Northwest Co. Inc.; Transcontinental Inc.

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Thursday June 5

ECB monetary policy meeting

(8:30 a.m. ET) Canada’s merchandise trade balance for April.

(8:30 a.m. ET) U.S. initial jobless claims for week of May 31. Estimate is 236,000, down 4,000 from the previous week.

(8:30 a.m. ET) U.S. productivity for Q1. The Street expects an annualized rate decline of 0.7 per cent with unit labour costs rising 5.7 per cent.

(8:30 a.m. ET) U.S. goods and services trade deficit for April.

(10 a.m. ET) U.S. global supply chain pressure index for May.

Earnings include: Broadcom Inc.; Enghouse Systems Ltd.; Lululemon Athletica Inc.; Rupert Resources Ltd.; Saputo Inc.

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Friday June 6

China foreign reserves

Japan household spending

Euro zone retail sales and real GDP

Germany industrial production and trade surplus

(8:30 a.m. ET) Canadian employment for May. The Street expects a drop of 0.1 per cent, or 17,500 jobs, with the unemployment rate rising to 7.0 per cent from 6.9 per cent and average hourly wages rising 3.2 per cent year-over-year.

(8:30 a.m. ET) U.S. nonfarm payrolls for May. Consensus is a gain of 130,000 jobs with the unemployment rate remaining 4.2 per cent and average hourly wages up 0.3 per cent sequentially and 3.7 per cent from the same period a year ago.

(3 p.m. ET) U.S. consumer credit for April.

• A federal appeals court granted the Trump administration’s request to temporarily pause a lower-court ruling that struck down most of President Donald Trump’s tariffs.
• The administration had told the U.S. Court of Appeals for the Federal Circuit that it might seek “emergency relief” from the Supreme Court.
• Trump officials including Peter Navarro and Stephen Miller heaped criticism on the trade court judges following their ruling.

https://www.cnbc.com/2025/05/29/blocked-trump-tariffs-trade-court-appeal.html

Oil prices were steady on Friday and headed for a second consecutive weekly loss, as investors weigh a potentially larger OPEC+ output hike for July, and uncertainty spreads around U.S. tariff policy after the latest courtroom twist.

Brent crude futures fell by 18 cents, or 0.28 per cent, to US$63.97 a barrel by 9:08 a.m. ET. U.S. West Texas Intermediate crude fell by 18 cents, or 0.3 per cent, to US$60.76 a barrel.

The Brent July futures contract is due to expire on Friday. The more liquid August contract was trading 33 cents lower, or 0.5 per cent, at US$63.02 per barrel.

At these levels, the front-month benchmark contracts were headed for weekly losses over 1 per cent.

Price moves dipped into negative territory after Reuters reported that OPEC+ may discuss an increase in July output larger than the 411,000 barrels per day that the group had made for May and June.

“The oil price would probably only come under greater pressure if the oil-producing countries were to increase their production even more than in previous months or give indications that there will be similarly high production increases in the following months,” Commerzbank analysts said earlier on Friday in a note, published before the news.

The potential hike comes as the global surplus has widened to 2.2 million barrels per day, likely necessitating a price adjustment to prompt a supply-side response and restore balance, said JPMorgan analysts in a note, adding they expect prices to remain within the current range before easing into the high US$50s by year-end.

U.S. President Donald Trump’s tariffs were expected to remain in effect after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court’s decision a day earlier to put an immediate block on the sweeping duties.

Oil prices were down more than 1 per cent on Thursday.

The appeals court’s decision pushed Brent to the bottom of its recent tight range, Investec’s head of commodities Callum Macpherson said.

Oil prices have lost more than 10 per cent since Trump announced his “Liberation Day” tariffs on April 2.

Also pressuring prices, U.S. consumer spending slowed in April, according to data published on Friday.