The US economy saw a slowdown in hiring but no leap in unemployment last month as the impact of Donald Trump’s trade war continues to play out.

Official data, which strips out the effects of seasonal workers, showed 139,000 net new jobs were created during May.

Market analysts and economists had expected a figure of 130,000 – down on the 147,000 for April.

The unemployment rate remained at 4.2% and hourly pay rates rose.

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The figures were released as the health of the US economy continues to attract close scrutiny amid ongoing fears of a recession risk in the world’s largest economy due to the effects of the US president’s trade war.

Unlike most developed economies, such a downturn is not determined by two consecutive quarters of negative growth, but by a committee of respected economists.

It’s known as the Business Cycle Dating Committee.

It uses employment data, as well as official growth figures, to rule on the status of the economy.

The threat of tariffs, and early salvoes of, the Trump administration’s protectionist agenda were blamed for a sharp slowdown in growth over the first three months of the year.

Economists have found it hard to predict official data due to the on-off, and often chaotic, nature of tariff implementation.

As such, all official figures are keenly awaited for news of the trade war’s impact on the domestic economy.

Other data this week showed a record 20% plunge in US imports during April.

Next week sees the release of inflation figures – the best measure of whether import duty price increases are working their way through the supply chain and harming the spending power of businesses and consumers.

It’s a key piece of information for the US central bank.

It has paused interest rate cuts, to the fury of the president, over trade war uncertainty.

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A forecast by the Paris-based OECD this week highlighted the chance of consumer price inflation rising above 4% later in the year.

It currently stands at an annual rate of 2.3%.

Fears of a US recession and trade war uncertainty have combined most recently with increasing market concerns about the sustainability of US debt, given Mr Trump’s tax cut and spending plans.

US stock markets are largely flat on the year while the dollar index, which measures the greenback against six other major currencies, is down 9% this year and on course for its worst annual performance since 2017.

European stocks entered positive territory in a small nod to the employment data, while US futures showed a similar trend.

The dollar rose slightly.

The reaction was likely muted because the data was well within expectations and seen as positive.

Commenting on the figures Nicholas Hyett, investment manager at Wealth Club, said: “The US labour market has shrugged off the tariff uncertainty that rocked global stock and bond markets in April and May.

“While the Federal government has continued to shed a small number of jobs, the wider economy has more than made up the difference, with the US adding slightly more jobs than expected in May. Wage growth also came in higher than expected – suggesting the economy is in rude health.

“That will be taken as vindication by the Trump administration – which has been clear that the tariffs are aimed squarely at supporting Main Street rather than pleasing Wall Street.

“Less positive from the White House’s point of view is that a strong economy and rising wages gives the Federal Reserve less reason to cut interest rates – pushing yields a touch higher and making the fiscal splurge built into Trump’s “Big Beautiful Bill” that bit more expensive.

“With rate cuts looking less likely, Fed Chair Jay Powell can expect to remain firmly in the president’s firing line once the spat with Musk is over.”

Elon Musk says Donald Trump appears in files relating to the disgraced paedophile financier Jeffrey Epstein.

It’s the latest in a string of barbs between the men as they appear to have dramatically fallen out in a public spat.

In a post on X, the tech billionaire said: “@realDonaldTrump is in the Epstein files. That is the real reason they have not been made public.

“Mark this post for the future. The truth will come out.”

He gave no evidence for the claim. Meanwhile, White House press secretary Karoline Leavitt dismissed the comment.

In a statement, she said: “This is an unfortunate episode from Elon, who is unhappy with the One Big Beautiful Bill [a Republican tax and spending bill] because it does not include the policies he wanted.

“The president is focused on passing this historic piece of legislation and making our country great again.”

Epstein killed himself in his jail cell in August 2019 while awaiting trial on charges of sex trafficking minors.

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In another post on Thursday, Musk, the owner of social media platform X, attacked Mr Trump’s tariffs, saying they “will cause a recession in the second half of this year.”

The Tesla boss shared a post calling for Mr Trump’s impeachment and asked whether it was “time to create a new political party in America that actually represents the 80% in the middle”.

Musk also said his company SpaceX will begin decommissioning its Dragon spacecraft “immediately” following Mr Trump’s threats to cancel government contracts with Musk’s businesses.

Dragon is the only US spacecraft available to deliver crew to and from the International Space Station.

The spat has already hit Tesla shares, which lost about $150bn (£111bn) in value, closing down 14.3% for the day.

It comes after the president said he was “disappointed” with Musk after the entrepreneur publicly criticised Mr Trump‘s signature tax bill.

The president suggested his former backer and adviser missed being in government and has “Trump derangement syndrome”.

He added: “I’m very disappointed in Elon. I’ve helped Elon a lot.”

In a Truth Social post, the US president said: “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV mandate that forced everyone to buy electric cars that nobody else wanted (that he knew for months I was going to do!), and he just went crazy!”.

On Tuesday, the world’s richest man called the president’s tax and spending bill “outrageous” and a “disgusting abomination” – days after abruptly leaving his position spearheading the Department of Government Efficiency (DOGE).

The bill, which includes multi-trillion-dollar tax breaks, was passed by the House Republicans in May and has been described by the president as a “big, beautiful bill”. By contrast, Musk has called it the “big, ugly bill”.

Shortly after the president expressed his disappointment in Musk on Thursday, the SpaceX boss responded.

“False”, he wrote on his X platform.

“This bill was never shown to me even once and was passed in the dead of night so fast that almost no one in Congress could even read it!”

In another scathing post on X, Musk claimed responsibility for Donald Trump’s re-election success.

He wrote: “Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.”

It came after Mr Trump told reporters the Tesla chief executive was unimpressed electric vehicle incentives were being debated in the Senate and could face being cut.

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Last Thursday, Musk revealed on X that his scheduled time as a “special government employee” was coming to an end.

Before the news broke, Musk’s father told Sky News his son was “not a very good politician”.

But speaking to Gillian Joseph on The World, Errol Musk insisted there was “no rift between Elon and Donald Trump”.

Bosses at six water companies have been banned from receiving bonuses for the last financial year under new legislation that comes into force on Friday.

Senior executives at Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water all face the restriction on performance-related pay for breaches of environmental, customer service or financial standards.

All six companies committed the most serious ‘Category 1’ pollution breaches, with Thames responsible for six such incidents, as well as breaching financial resilience regulations when its credit rating was downgraded.

The nine largest water and wastewater providers paid a total of £112m in executive bonuses since 2014-15, though the 2023-24 total of £7.6m was the smallest annual figure in a decade.

The new rules give water industry regulator Ofwat the power to retrospectively prevent bonuses paid in cash, shares or long-term incentive schemes to chief executives and chief financial officers for breaches in a given financial year.

Ofwat cannot, however, prevent lost bonuses being replaced by increased salaries, as routinely happened in the banking sector when bonus pots were capped following the financial crisis.

Government sources insist they do not want to cap executive pay, but suggested the regulator could consider expanding its powers to ensure any remuneration is covered by shareholder funds rather than customer bills.

Water suppliers have routinely defended executive bonuses and pay on the grounds that awards are necessary to attract and retain the best talent to lead complex, multi-stakeholder organisations.

Thames Water’s chief executive, Chris Weston, was paid a bonus of £195,000 three months after joining the company in January 2024, taking his total remuneration to £2.3m.

Last month, the company withdrew plans to pay “retention” bonuses of up to 50% of annual salary to senior executives after securing an emergency £3bn loan intended to keep the company afloat into next year.

Earlier this week, its preferred equity partner, US private equity giant KKR, walked away from a deal to inject £4bn despite direct lobbying from 10 Downing Street, in part because of concern over the negative political sentiment towards the water industry.

The decision came a few days after Thames was hit with a record fine of £123m for multiple pollution incidents and breaching dividend payment rules.

Welcoming the bonus ban, the Environment Secretary Steve Reed said: “Water company bosses, like anyone else, should only get bonuses if they’ve performed well, certainly not if they’ve failed to tackle water pollution.

“Undeserved bonuses will now be banned as part of the government’s plan to clean up our rivers, lakes and seas for good.”

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Whitehall sources say they “make no apology” for calling out water company conduct, despite concerns raised by an independent reviewer that negative sentiment and misdirected regulation has put off investors and raised the cost of financing the privatised system.

In an interim report, former Bank of England deputy governor Sir Jon Cunliffe said “negative political and public narrative and Ofwat’s approach to financial regulation have made the sector less attractive”.

Sir Jon will publish final recommendations to reform water regulation next month, with the aim of addressing public concerns over pollution and customer service, while attracting long-term, low-risk, low-return investors.

Water bills will rise on average by 36% over the next five years as companies pledge to spend £103bn on operating, maintaining, and improving infrastructure, including £12bn on cutting sewage spills.