April jobs report: Employers added robust 177,000 jobs as Trump's tariffs kicked in
Paul Davidson, USA TODAY
6 min read
U.S. hiring remained sturdy in April as the economy added 177,000 jobs despite jitters over President Donald Trump’s massive import tariffs and widening federal government layoffs.
But payroll gains for February and March were revised down sharply, at least partly offsetting the big jump last month.
The unemployment rate held steady at 4.2%, the Labor Department said Friday.
Ahead of the report, economists forecast 135,000 job gains, according to a Bloomberg survey.
"The ‘R’ word that the labor market is demonstrating in this report is resilience, certainly not recession," said Olu Sonola, head of U.S. economic research for Fitch Ratings.
So far this year, monthly job gains are averaging 143,000, down from 168,000 in 2024 but a solid figure in light of heightened uncertainty over the Trump administration's economic policies and stock market turmoil.
What field is hiring the most right now?
Health care, a steady payroll generator the past couple of years, again led the job gains with 51,000. Transportation and warehousing added 29,000 as many companies stepped up imports ahead of tariffs. Leisure and hospitality, which includes restaurants and bars, added 24,000; professional and business services, 17,000; and financial activities, 14,000.
But manufacturing cut 1,000 jobs and retail shed 1,800. Both industries are beset by uncertainty amid tariffs that are likely to squeeze their profits or curtail sales as they pass the costs to consumers.
And federal employment declined by 9,000 in a sign that sweeping cuts by Elon Musk's Department of Government Efficiency (DOGE) are starting to crimp the jobs numbers.
Are wages in the US increasing?
Average hourly earnings rose 6 cents to $36.06, keeping the yearly increase at 3.8%.
Wage growth generally has slowed in recent months and is now consistent with the Federal Reserve’s 2% inflation goal, economist Nancy Vanden Houten of Oxford Economics wrote in a research note.
Fed officials “no longer see wage growth as a source of inflationary pressure,” she said.
Strong growth in productivity, or output per worker, also has allowed companies to give slightly bigger raises without having to raise prices, economists say.
Will the Fed lower interest rates in 2025?
The report is expected to do little to prod the Federal Reserve to cut its key interest rate at a meeting next week, portraying a healthy labor market.
While the tariffs are projected to sap Americans’ buying power and have raised the prospect of recession later this year, they’re also expected to boost prices.
That would leave the central bank torn between its missions. It raises rates or keeps them higher for longer to battle inflation. It lowers rates to head off – or dig the economy out of – recession.
Fed Chair Jerome Powell has said officials have paused their rate cuts as they wait and see which economic malady poses the biggest problem – high inflation or rising unemployment. But all else equal, he has suggested officials will prioritize keeping a lid on prices.
How is the job market in the US?
The labor market in April straddled the line between the solid economy that prevailed before Trump announced sweeping reciprocal tariffs on April 2 and the uncertainty that has since undercut consumer and business confidence.
In coming months, the duties are projected to sharply increase prices and curtail consumer spending, which makes up about 70% of economic activity. Although Trump paused double-digit tariffs on dozens of countries for 90 days, he hiked fees on China to 145%, adding to Americans' cost burden.
In a research note, Bank of America said it expected minimal impact from the import levies in the April jobs figures. It noted industries such as transportation and warehousing temporarily stepped up hiring as companies stocked up on foreign shipments before tariffs took effect.
The bank’s economists estimated employment gains totaled a healthy 165,000 last month, adding they believed tariffs will take a bigger toll on hiring starting in May.
But EY-Parthenon wrote that “elevated uncertainty around tariff policy and the economy pushed many firms into holding patterns.” It forecast just 65,000 payroll additions.
Most analysts said it was too early for DOGE's federal layoffs to substantially show up in the April numbers. While the government has announced more than 200,000 cuts, Capital Economics said many federal employees have been placed on administrative leave or accepted deferred retirement and are still counted as employed.
Economist Nancy Vanden Houten of Oxford Economics reckoned a decline of 10,000 federal jobs would be more than offset by the addition of 20,000 state and local government positions. But she wrote to clients that “it’s only a matter of time before federal layoffs are more noticeable” in the monthly figures.
Layoffs more broadly have remained historically low based on initial jobless claims but that too could change as business uncertainty grows. U.S. employers announced 105,441 job reductions in April, the highest total for the month since the depths of the pandemic in April 2020, outplacement firm Challenger, Gray & Christmas said this week.
While the federal government this year so far has said it’s slashing 282,000 jobs, tech companies announced the most of any industry in April at 27,000, Challenger said.
Compounding strains in the job market are the president’s deportations of potentially hundreds of thousands of immigrants who lack permanent legal status in 2025. That’s expected to further constrain employment growth by limiting the pool of workers looking for jobs, especially in industries such as restaurants, hotels and agriculture.
Yet fewer job hunters also could mean the unemployment rate will inch up just gradually despite a rise in layoffs, making it more challenging for the Fed to lower interest rates.
The jobs report follows Commerce Department data this week that said the economy shrank at annual rate of 0.3% in the first quarter, its worst performance since early 2022. Although consumer and business spending were solid, the flood of imports ahead of tariffs translated into a contraction because foreign shipments to the U.S. are subtracted from economic output totals.
Is the US in a recession?
The statistical quirk almost certainly means the nation isn’t in a recession. But forecasters say there’s nearly a 50% chance of a downturn later this year, largely because of the duties, according to a survey by Wolters Kluwer Blue Chip Economic Indicators.
If there is a slump, net U.S. job gains could quickly turn to losses.
