Jobs report preview: As tariffs take effect, which sectors are hiring and which aren't?

USA Today

01-05-2025

Jobs report preview: As tariffs take effect, which sectors are hiring and which aren't?
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Tariffs are pushing Americans to cut costs
A new survey from Clarify Capital shows 39% of Americans are taking on side jobs to help absorb tariff-induced price hikes.
Scripps News
It may feel like the nation is already knee-deep in recession, with a report Wednesday showing the economy contracted in the first quarter, consumer confidence at historic lows and the stock market nearly 10% off its record high in February.
It isn't. The drop in output early this year was traced to a flood of imports – which are subtracted from gross domestic product – as businesses raced to order goods before President Donald Trump's tariffs took effect. The tariff impact should reverse in the current quarter as imports dip below normal following the surge, lifting the economy in the short term, Capital Economics said.
But most forecasters believe stagnation or recession will arrive the second half of the year as Trump's sweeping import fees filter down to consumer prices and curtail household spending. That's assuming Trump doesn't rescind the duties or announce deals with foreign countries to lower them.
The April jobs report, due out Friday, could provide a window into whether last month's economy and labor market were still propped up by a pre-tariff world of solid consumer and business spending or starting to wobble as uncertainty about the duties discouraged hiring.
What is the job report prediction for the US?
Some economists and staffing firms believe the report could feature both dynamics. Some industries, like manufacturing, likely began to pull back or freeze hiring while others pressed forward or even stepped up staff additions as a result of the turmoil. Others, like transportation and warehousing, probably brought on more workers because of the tariffs but are likely to pull back in coming months, experts say.
For many employers, 'Their approach is just watch and wait,' said Raj Namboothiry, senior vice president of Manpower North America, a leading staffing firm.
Overall, economists surveyed by Bloomberg estimate employers added 130,000 jobs last month, well below March's robust 228,000 but above the 114,000 average in January and February. That's not a bad total for a job market that's downshifting after a pandemic-related burst.
But payroll processor ADP's separate survey on Wednesday reported a meager 62,000 private-sector job gains last month, raising concerns that trade-related uncertainty already could be damping job growth.
Will government layoffs hurt the economy?
Forecasters generally don't believe federal layoffs and buyouts by Elon Musk's Department of Government Efficiency will yet show up in the monthly jobs numbers.
Here's a look at sectors that are likely paring back hiring.
Manufacturing
Manufacturers are in the crosshairs of the levies. And the many that import raw materials and parts far outnumber those that make goods in the U.S., staffing officials said.
In the fashion industry, apparel makers are halting hiring and voiding employee contracts as they grapple with 145% duties on shipments of material and accessories from China, said Emily Levine, executive vice president of Career Group Companies, a recruiting firm for the industry.
'It's really eating into profit margins,' Levine said. 'It's been crushing for the brands to take that kind of financial hit.'
Transportation, warehousing and supply chain
This sector is probably most affected by tariffs. Over the past couple of months, employers likely accelerated hiring as businesses stocked up on foreign goods before the duties hit, a surge that could be reflected in the April data, Bank of America said in a research note. But tariffs 'will likely start weighing' on industry payrolls in coming months, the firm said.
The shift could come quickly. In March, Indeed job postings for warehouse positions were 5.5% above their pre-pandemic level, noted Cory Stahle, an economist at the online jobs board. But in April, they fell to 2.5% below their pre-crisis mark, Stahle said.
At the same time, companies are adding higher-level supply-chain executives as companies move their goods sourcing from China to the U.S. or other Asian countries, said Kareem Bakr, managing director of Phaidon International, a recruiting agency.
Construction
Contractors import lots of lumber, steel, aluminum and other materials from Canada and other foreign countries. They likely staffed up to finish projects before tariffs kicked in, said economist Diane Swonk, chief economist at KMPG. But some planned projects have been temporarily shelved, she said. That could mean weaker job gains ahead.
Retail
Some car dealers rushed to import vehicles ahead of the tariffs, possibly boosting hiring the past couple of months, Swonk said. Manpower's Namboothiry said retail placements have been steady.
But hiring in retail is expected to be tepid in the medium term 'as retailers brace for the effects of tariffs, specifically the pressure on margins and prices,' Swonk wrote in a research note.
Technology
Tech jobs generally follow the broader economy. As a result, some hiring activity 'has stalled as companies wait and see how budgets are changing,' Phaidon said in a statement.
But employers haven't stopped hiring for cutting-edge roles in artificial intelligence and data science – areas that could help them become more efficient and ultimately do more with fewer workers, Bakr and Namboothiry said.
Other industries, meanwhile, have continued to hire or ramped up their plans:
Health care
There's been no slowdown in hiring for health care, which is largely immune from the economy's tremors and enjoys a fast-growing market featuring millions of aging baby boomers, Namboothiry said.
Leisure and hospitality
While Americans may be rethinking big-ticket purchases, they're still frequenting restaurants, taking in movies and staying at hotels for now, Namboothiry said, bolstering hiring. They're turning toward "cost-conscious consumer experiences," he added
Financial services
Far from discouraging hiring, the volatile stock market has opened the door to more recruiting at investment banks that earn commissions on transactions whether stocks are or down and hedge funds that bet on market gyrations, Bakr said,
Investment banks, he said, are also bringing on turnaround specialists that can overhaul distressed companies during a shaky economy.
Legal and compliance
The tariffs have spurred demand for lawyers and compliance professionals who ensure that companies are following new customs and trade practices, Bakr said.