New data not likely to change Fed's position.

Last week’s employment data provided little clarity to the Federal Reserve’s wait-and-see approach. Some points were positive, some cautious. The wait will likely continue.

At a high-level, the US labor market looks resilient in the face of the surrounding uncertainty. The unemployment rate is now 4.2%, unmoved since March 2025, and up only marginally year-over-year.  

However, other employment indicators released last week suggest a moderating job market. The US added 139,000 new jobs in May. While this is better than consensus forecast, it was less than May’s addition of 147,000 and below the 150,000 mark conventionally viewed as a healthy level of labor market growth. Additionally, initial jobless claims rose to 247,000, from 239,000 in the prior week, and the four-week moving average has steadily moved higher since mid-April.

Survey data last week continues to skew to the weaker side and remains indicative that more noticeable economic pain may still be on its way. Both the ISM manufacturing and services indices fell month-over-month to 48.5 and 49.9, respectively. That keeps them  slightly in contraction territory. Within the services survey, select quotes from respondents included: “tariffs have increased the cost of doing business” and “tariff variability has thrown residential construction supply chains into chaos.”

As has been the theme of late, both the markets and the Fed must wait to see whether the future hard data reflects the current survey responses.