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The pace of hiring continued to slow in May, pointing to a labor market that’s easing, but not unraveling. Job growth was concentrated in just a couple of sectors, while broader gains remained muted and churn across the workforce fell. Employers are hiring more cautiously, and workers are staying put, classic signs of a market adjusting to economic uncertainty rather than reacting to acute distress. Wage growth is still outpacing inflation, and the unemployment rate held steady at 4.2%, keeping the soft-landing narrative intact, for now.

For investors, this report doesn’t force the Fed’s hand, but it does sharpen focus on what comes next. With higher tariffs clouding the inflation outlook and economic momentum leveling out, the Fed is likely to stay on pause until the data demands otherwise. Key reports this week, the Consumer Price Index (Wednesday) and Producer Price Index (Thursday), will be critical in shaping that view. A labor market that’s slowing without stalling buys the Fed time. Whether inflation cooperates is the next test.