Employers added a surprising 177,000 jobs as job market shows resilience. Unemployment stays at 4.2%
American employers added a better-than-expected 177,000 jobs in April as the job market showed resilience in the face of President Donald Trump's trade wars.
Hiring was down slightly from a revised 185,000 in March and came in above economists' expectations for a modest 135,000. The unemployment rate remained at a low 4.2%, the Labor Department reported Friday.
Trump's aggressive and unpredictable policies – including massive import taxes – have clouded the outlook for the economy and the job market and raised fears that the American economy is headed toward recession.
But Friday's report showed the job market remains solid. 'The labor market refuses to buckle in the face of trade war uncertainty,'' Christopher Rupkey, chief economist at fwdbonds, a financial markets research firm. 'Politicians can count their lucky stars that companies are holding on to their workers despite the storm clouds forming that could slow the economy further in the second half of the year.''
Transportation and warehousing companies added 29,000 jobs last month, suggesting that companies have been stocking up before essential, imported goods are hit with a wave of new tariffs, driving prices higher. Healthcare companies added nearly 51,000 jobs and bars, restaurants almost 17,000 and construction firms 11,000. Factories lost 1,000 jobs.
Labor Department revisions shaved 58,000 jobs from February and March payrolls.
Average hourly earnings ticked up 0.2% from March and 3.8% from a year ago, nearing the 3.5% that economists view as consistent with the 2% inflation the Federal Reserve wants to see.
The report showed that 518,000 people entered the labor force, and the percentage of those working or looking for work ticked up slightly.
Trump's massive taxes on imports to the U.S. are likely to raise costs for Americans and American businesses that depend on supplies from overseas. They also threaten to slow economic growth. His immigration crackdown threatens to make it more difficult for hotels, restaurants and construction firms to fill job openings. By purging federal workers and cancelling federal contracts, Elon Musk's Department of Government Efficiency risks wiping out jobs inside the government and out.
Trump's policies have shaken financial markets and frightened consumers. The Conference Board, a business group, reported Tuesday that Americans' confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic.
Still, Bill Adams, chief economist at Comerica Bank, called the jobs report 'reassuringly normal. The fears of a softer labor market due to tariff uncertainty went unrealized last month ... There are signs that businesses are reining in plans for hiring and capital spending and that consumers are turning more cautious toward discretionary spending.''
But Adams noted that those cautious signs come from surveys of businesses and consumers and have not showed up so far in actual economic data.
American workers have at least one thing going for them. Despite the uncertainty about fallout from Trump's policies, many employers don't want to risk letting employees go – not after seeing how hard it was to bring people back from the massive but short-lived layoffs of the 2020 COVID-19 recession.
'They laid millions of these people off, and they had a hell of a time getting them back to work,'' Boston College economist Brian Bethune said before Friday's report came out. "So for now, the unemployment rate and the number of people filing claims for jobless benefits every week remain low by historical standards.
The federal government's workforce fell by 9,000 on top of 17,000 job losses in February and March, Still, the full effect of Musk's DOGE cuts may not be showing up yet. For one thing, Bethune noted, job cuts orders by the billionaire's DOGE are still being challenged in court. For another, some of those leaving federal agencies were forced into early retirement and don't show up in the Labor Department's count of the unemployed.
After the jobs numbers were released, Trump repeated his call for the Federal Reserve to lower its benchmark short-term interest rate, which it raised to combat inflation. Trump said on social media platform Truth Social that there is 'NO INFLATION' and 'employment strong.'
Yet as long as the job market remains healthy, the Fed will likely stay on the sidelines as it takes time to evaluate the impact of tariffs. Fed chair Jerome Powell has underscored that the duties are likely to push up prices in the coming months, making the central bank wary of the potential for higher inflation.
The Fed typically fights inflation with higher interest rates, so it is unlikely to cut its key short-term rate anytime soon. It might change course and reduce rates if layoffs spiked and unemployment rose, but Friday's report suggests that isn't happening yet.
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