Jobs numbers dash hopes for rate cut, mortgage hiring rises

May's slightly stronger than anticipated employment data dampened lenders' hopes for further downward pressure on rates in the immediate future, as they added incrementally to payrolls for the spring homebuying season.

U.S. employers overall added 139,000 jobs last month, above consensus expectations for around 130,000. Unemployment remained stable at 4.2%. Nonbank mortgage employment, which is reported with more of a lag, rose to 264,700 in April from 264,000 in March. 

"These data lined up well with market expectations and are likely to keep the Fed on hold for the next meeting or two," said Mike Fratantoni, chief economist at the Mortgage Bankers Association, in a press release commenting on the Bureau of Labor Statistics data.

The latest numbers leave lenders waiting for a development that could convince Federal Reserve officials to lower rates. They also suggest housing finance firms will remain slow to hire amid shifting tariff policy and inflation that make the economy's future direction tough to gauge.

"The labor market's resilience puts the Fed in a difficult spot: inflation pressures remain sticky, and the cooling many expected simply hasn't materialized in the data that matters most," said Nigel Green, CEO of advisory firm and asset manager DeVere Group, in an emailed statement.

Other signs of slowing mean rate cut still possible later

However, some aspects of the latest round of employment statistics do point to gradual weakening in the economy, according to Fratantoni.

"The unemployment rate remained steady at 4.2% but the participation rate dropped, indicating that fewer individuals without a job are actively looking for work. All in, the job market is softening, but not quickly," he said. 

The BLS employment numbers Friday also followed a round of what were generally weak economic indicators earlier this week, according to a report by investment firm Navellier & Associates.

The private nonfarm employment number reported in the ADP payroll report was the weakest in two years with only 37,000 job additions and the Federal Reserve's Beige Book survey indicated "all districts reported elevated levels of economic and policy uncertainty."

Fed Governor Adriana Kugler, who is concerned about the "stagflation" scenario in which the economy is weak and consumer costs rise, said in a speech earlier this week that she's seen an uptick in references to "layoffs" in the Beige Book.

Navellier also noted that a recent Wall Street Journal article contained speculation from private economists about whether government staffing shortages have been limiting BLS data collection related to inflation, but did not specify a particular error in it.

Federal government employment has steadily fallen in 2025 and is down nearly 60,000 from where it was on Jan. 1, Fratantoni noted.

What mixed signals in job openings mean

Some job indicators have improved in the latest month but still are part of a downward trend for the year.

Overall job openings rose to 7.4 million in April from 7.2 million during March, BLS data released earlier this week shows.

Those numbers were lower than the 7.8 million reported for January and February's 7.5 million, according to Job Openings and Labor Turnover survey data.

"We don't see the April rebound as indicating strength in labor demand. Instead, we view it as consistent with a continued gradual cooling," Barclays' economics team said in a research note published Wednesday.