While the equity market continues to shrug off the headlines (think tariffs, Russia-Ukraine, the tax bill, etc.), a slate of data this week did not meet expectations. As we’ve mentioned in the past, one month does not make a trend, but we may be starting to see the impact of global economic and political uncertainty take hold in these metrics. Let’s review the various reports to see where we stand currently after a weak week of data.
***Every metric will show three numbers: Actual / Consensus / Previous Month
ISM Manufacturing PMI | 48.5 / 49.5 / 48.7 | Weak
The ISM Manufacturing PMI in the U.S. fell to 48.5 in May from 48.7 in April, below market expectations of 49.5. The reading marked the third consecutive month of contraction in the manufacturing sector and the sharpest decline since November 2024, highlighting mounting economic uncertainty and sustained cost pressures, partly driven by volatile trade policies under the Trump administration.
Job Openings and Labor Turnover Summary (JOLTs) | 7.391M / 7.100M / 7.200M | O.K.
Job openings in the United States increased by 191K in April, exceeding market expectations. The number of job openings increased in the private sector, rising by 202K, while government job openings declined by 11K. It’s important to note that while the JOLTs numbers were better than expected, they represent data from April, as this report lags by an additional month versus the others. It is quite possible this metric will continue its recent downtrend when the May numbers are released in July.
ISM Services PMI | 49.9 / 52.0 / 51.6 | Weak
The ISM Services PMI report was likely the biggest surprise of the week, with expectations for a slight improvement from April giving way to not only a decline but also a contraction in services (anything below 50 indicates contraction, while anything above 50 indicates expansion). “Respondents continued to report difficulty in forecasting and planning due to longer-term tariff uncertainty and frequently cited efforts to delay or minimize ordering until impacts become clearer,” Steve Miller, Chair of the Institute for Supply Management Services Business Survey Committee, said.
ADP Employment Change | 37K / 115K / 60K | Weak
Private businesses in the U.S. added 37K workers to their payrolls in May 2025, the lowest since March 2023, compared to a downwardly revised 60K in April and forecasts of 115K. “After a strong start to the year, hiring is losing momentum. Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers”, said Dr. Nela Richardson, chief economist, ADP.
Initial Jobless Claims | 247K / 235K / 239K | Weak
Initial jobless claims in the U.S. rose by 8K to 247K in the week ending May 31, up from the previous week’s revised figure of 239K and defying market expectations for a decline to 235K. This marks the highest level since the first week of October 2024, suggesting early signs of softening in the labor market amid ongoing economic uncertainty. Interestingly, continuing claims were slightly lower, decreasing to 1.904M from 1.910M the previous week.
Non-Farm Payrolls | 139K / 130K / 147K | Weak
While non-farm payrolls increased by 139K in May, which was slightly above forecasts of 130K and only a small slowdown from April’s 147K increase, there is more to be understood. The notable item is that the figures for March and April were revised downward. With these revisions, employment in the two months combined is 95K lower than previously reported. The data remains consistent with a slowing, yet still growing, labor market. However, recent policy changes could continue to put downward pressure on employment in the coming months.
Unemployment Rate | 4.2% / 4.2% / 4.2% | O.K.
The U.S. unemployment rate held steady at 4.2% in May for a second straight month, matching market expectations. The rate has remained within a narrow 4.0%–4.2% range since May 2024. While this appears to be consistent, there was weakness in the labor force participation rate, which decreased to 62.4% from 62.6% the previous month, matching February’s two-year low. This suggests that there may be some incremental weakness in the labor market, as fewer people are actively seeking employment.
Taken together, this week’s scorecard skews weak: manufacturing remains in contraction, services unexpectedly joined it, and headline job creation is easing even before downward revisions. The labor market is still expanding, albeit at a slower pace, and participation is slipping marginally. None of this guarantees trouble—one month rarely does—but it does argue for keeping a close eye on the data going forward. We’ll continue to monitor the June data to determine whether May was a one-time occurrence or the beginning of a broader downward trend.
Markets / Economy
- Markets kept chugging higher as weak economic data failed to halt the rally from its April lows. The S&P finished up 1.5%, the Nasdaq was up 2.2%, and the small-cap Russell 2000 was up 3.2%.
- The ECB (European Central Bank) cut its key interest rate by 25 basis points at its June meeting, based on updated inflation and economic forecasts. Inflation is near the 2% target, with projections showing 2.0% in 2025 (vs. 2.3% previously), 1.6% in 2026 (vs. 1.9% previously), and 2.0% in 2027.
Stocks
- U.S. equities were in positive territory. Technology and Energy were the top performers, while Consumer Staples and Utilities lagged. Growth stocks outperformed value stocks, and small-cap stocks outperformed large-cap stocks.
- International equities closed higher for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield increased nine basis points to 4.51% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led for the week, followed by corporate bonds and government bonds.
