America’s long-resilient job market continues to defy expectations — even in the wake of swirling uncertainty.
The US economy added a surprisingly strong 177,000 jobs in April, a slight slowdown from March’s downwardly revised 185,000 gains, according to Bureau of Labor Statistics data released Friday. April’s gain was stronger than the average pace of monthly job growth in the prior three months.
Meanwhile, the unemployment rate was unchanged at 4.2%, a historically low level.
Economists polled by data firm FactSet were expecting the economy to have added just 135,000 jobs last month, and that the unemployment rate held at 4.2%.
US stocks moved higher Friday morning as investors digested the report. The Dow rose 490 points, or 1.2%. The broader S&P 500 rose 1.15% and the tech-heavy Nasdaq Composite gained 1%.
April’s jobs report marks another solid month of employment gains and a continuation of a historic expansion of the labor market, but that’s on the backdrop of growing recession fears.
Since staging a stunning recovery from the pandemic, the labor market has been a pillar of strength for the economy. It remains to be seen if that will persist amid the historically high level of uncertainty sowed by President Donald Trump’s policies.
Department of Labor Secretary Lori Chavez-DeRemer touted the jobs news Friday, telling CNN’s Pamela Brown, “Everything in this jobs report was positive.” Despite Americans’ growing concerns about a recession, she said, “We see no reason that a recession is anywhere near.”
Meanwhile, Trump once again called on the Federal Reserve to lower interest rates after the jobs report.
“… employment strong, and much more good news, as Billions of Dollars pour in from Tariffs,” Trump wrote in a post on Truth Social. “Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”
However, there’s no truth to Trump’s claim that there’s “no inflation.” Data released by the Commerce Department this week showed that the Personal Consumption Expenditures price index — the Fed’s favored inflation gauge — rose 2.3% in March from the year before. That’s a slower pace of price hikes than February’s 2.7% increase.
The Fed is facing a unique dilemma over whether to lower interest rates as inflation remains above its 2% target or to raise rates to brace for the inflationary impact from Trump’s tariffs.
Additionally, the administration’s major policy shifts have already shown up in official labor figures: The federal government shed 9,000 jobs last month, down 26,000 since January, the Labor Department reported. Trump’s Department of Government Efficiency has slashed jobs and eliminated or dramatically downsized a slew of federal agencies. Still, the government sector overall, including state and local, was up 10,000 jobs in April.
“We can push recession concerns to another month,” Seema Shah, chief global strategist at Principal Asset Management, said in commentary issued Friday. “Job numbers remain very strong, suggesting there was an impressive degree of resilience in the economy in play before the tariff shock.”
April’s top job creators
Many of the same industries that have pumped out jobs over the past year continued to do so in April.
The private education and health services sector was April’s top job creator, adding 70,000 jobs last month. Many of those gains were driven by the health care industry, which contributed 51,000 of those jobs. Hospitals and ambulatory health service providers were the top job-creating firms in the industry.
The transportation and warehousing industry was April’s second-biggest job creator, expanding headcount by 29,000. In recent months, Americans have rushed to purchase goods to get ahead of Trump’s tariffs, which sent retail sales surging in March.
Leisure and hospitality also added jobs at a brisk pace last month, growing employment by 24,000. The industry has been a reliable source of job growth over the past year, but that could be a risk for the broader labor market’s strength if people begin to cut back on spending.
“A cooling economy could see discretionary spending — such as eating out and travel — being trimmed early on,” said James Knightley, chief international economist at ING. “This points to the risk of a sharp slowdown in hiring within the leisure and hospitality sector.”
In addition to the federal government, retailers and manufacturers lost jobs in April, declining by 1,800 and 1,000 jobs, respectively.
Employers paralyzed by uncertainty
While the labor market seems to be holding steady for now, surveys demonstrate employers are on edge over the Trump administration’s massive policy shifts, which doesn’t bode well for hiring.
“What seems like a perfect report shows what could have been for the US economy before the tariff bite,” Gregory Daco, chief economist at EY-Parthenon, told CNN’s Matt Egan on Friday. “Tariffs only started to bite later in the month, so the demand and employment shock will be more visible in the May-June data.”
Expanding headcount is typically a costly investment for businesses, so the uncertainty stemming from Trump’s policies is likely giving business leaders some pause. In addition to the frenetic back-and-forth on tariffs, which makes it difficult to account for future costs, businesses are also facing possible cutbacks in federal funding and worker shortages due to Trump’s clampdown on immigration.
The share of small businesses planning to create new jobs declined sharply in March, according to the National Federation of Independent Business’ latest survey. The NFIB said in a release that “the last time hiring plans were this low was April 2024.” And it’s not just small businesses waiting for some clarity.
“The narrative that we’re hearing from the corporate community is that we want to wait and see,” said Nathan Sheets, global chief economist at Citigroup. “And even if folks are optimistic, they will ultimately land in an okay place, they still want to see what everything will look like, which could weigh on business investment.”
On Tuesday, the Labor Department reported that employers had about 7.2 million job openings in March, slightly above a four-year low reached in September. Economists look at gauges of labor demand for clues on future hiring.
The Federal Reserve’s latest Beige Book report, a periodic collection of survey responses from businesses across the country, was riddled with anecdotes of firms citing uncertainty as a major headache. Many also signaled plans to curb their hiring as a result.
“Many firms planned to pause or limit hiring going forward because of policy uncertainty,” the report said, referring to businesses in the Boston Fed’s district.
A snapshot this week of the US labor market by payroll services provider ADP didn’t show the same strength reflected in the government’s tally. ADP said employers added just 62,000 jobs in April, well below the 147,000 jobs it reported for March.
A mixed-bag labor market
On many fronts, the labor market looks to be in great shape, but it has its flaws.
Unemployment remains low, employers continue to add jobs at a brisk pace, and wages continue to outpace inflation. In April, average hourly earnings grew 3.8% from a year earlier, the Labor Department said Friday. That’s well above the 2.3% annual gain for consumer prices, according to the March PCE.
Still, Americans who are out of work are struggling to find employment. The latest jobs report showed that people who have been unemployed for more than 26 weeks, and are seeking a job, rose in April to 1.67 million, the highest level since February 2022.
People are also remaining on unemployment rolls for longer. The number of Americans receiving ongoing jobless benefits rose to 1.91 million in the week ending April 19, the Labor Department reported Thursday, the highest level since November 2021. Continuing claims are reported with a one-week lag.
“While the April jobs report confirms that the labor market has not yet stalled, the combination of trade uncertainty, federal downsizing and restricted labor supply is clearly taking a toll,” said Sung Won Sohn, an economics professor at Loyola-Marymount University, in a note Friday. “Industries likely to be hardest hit in the coming months include manufacturing, retail, transportation, agriculture, hospitality and federal contract services.”
For the Fed, which is slated to announce its latest policy decision next week, the labor market’s resilience means the central bank can continue to stand pat on interest rates as officials wait for Trump’s policies to show up in economic data. The Fed lowers borrowing costs when it’s clear that inflation is heading toward its 2% target — but also when the labor market unexpectedly falters.
CNN’s Alicia Wallace, Elisabeth Buchwald and Matt Egan contributed reporting.
