By Rick Schwerd | June 6, 2025
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Labor Market Remains Solid
The economy added 139,000 jobs during May and the unemployment rate remained at 4.2 percent. Both data points were close to expectations. The report falls into the “not too hot, not too cold” category and equity markets initially rallied on the news. While companies aren’t aggressively hiring at this time, layoffs remain at low levels. The number of job openings increased slightly to 7.39 million.
The decline in government hiring is one of the biggest reasons the number of jobs added is down from 2023 and 2024. The monthly average hiring gain in 2023 was 251,000, 59,000 of which were in government. In 2024, the economy added 168,000 jobs on average, 37,000 of which were in government. This year we’re averaging 144,000 jobs per month and government hiring is down, including a loss of 22,000 in May.
Mixed Economic Data
Aside from the labor market data, recent economic reports have been mixed. Consumer confidence showed a strong rebound in May, up to 98.0 after cratering in April at 85.7. However, we remain well below the post-election high of 109.5 recorded in December.
The Federal Reserve’s favored inflation gauge, Personal Consumption Expenditures (PCE) dropped to 2.1 percent in April, nearing the Fed’s 2 percent inflation target. Core-PCE, which removes volatile food and energy prices dropped to 2.5 percent, its lowest level since March 2021.
The all-important spring selling season for homes has been disappointing. Pending home sales were down 6.3 percent month-over-month in April and down 2.5 percent compared to last year. The S&P/Case Shiller Home Price Index dropped 0.12 percent in March, the first negative month-over-month reading since January 2023. High prices and elevated mortgage rates continue to weigh on activity.
The monthly trade deficit was cut by more than half in April as pre-tariff stocking of imports subsided. The surge in imports during the first few months of the year resulted in a slightly negative GDP during the first quarter of the year. Given the drop in imports, we are now expecting a relatively strong second quarter GDP reading.
Markets Continue Their Upward Trend
Markets continue to recover from their tariff induced sell-off. Tech stocks, which had been the biggest victim during the late winter/early spring drop, have been the leaders during the recovery. The tech-heavy NASDAQ index is up more than 9 percent during the last month and is now more than 1 percent higher year-to-date. The broad market S&P 500 has gained nearly 6 percent during the last month and is sitting just below 6,000. It is more than 1.5 percent higher this year.
Last week, Nvidia posted another quarter of very strong earnings and revenue growth, capping what Evercore-ISI deemed a “blowout” first quarter 2025 earnings season. According to Evercore-ISI, S&P 500 earnings were up 13.1 percent during the first quarter, helping to propel stocks off their April 7 low.
Looking Ahead
With earnings season winding down, we are entering a relatively quiet news period for markets. Next week, we have more inflation data coming with May CPI and PPI releases. Inflation data has been improving recently, but we will be looking for tariff-related increases over the next several months. May retail sales will be the biggest economic release the following week.
As always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415-4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank, formerly named Glens Falls National Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not-for-profit relationships.