In April, the U.S. labor market showed unexpected strength, adding 177,000 jobs, well above the 133,000 economists had anticipated. The unemployment rate remained steady at 4.2%, a sign of resilience in an economy dealing with increasing uncertainty from President Trump’s recent wave of tariff announcements.
While solid, this growth came in below the 185,000 jobs added in March and coincided with downward revisions to February and March’s numbers, which together were trimmed by 58,000. Some economists interpret the April gains as the last hurrah before volatility takes a firmer grip.
“This is solid data that no one fully trusts,” said Thomas Simons, chief U.S. economist at Jefferies. “It reflects hiring decisions from before the tariffs were actually announced.”
Sector Breakdown: Transportation, Healthcare Lead; Federal Jobs Fall
Healthcare, financial services, and social assistance continued to drive employment, each posting steady gains. One standout was the transportation and warehousing sector, which added 29,000 jobs—likely due to companies racing to shore up supply chains before tariffs take full effect.
However, federal government employment fell for the third straight month, shedding 9,000 jobs. Those numbers understate the true scale of cuts, as many affected workers remain technically employed due to severance or legal delays tied to the administration’s new “Department of Government Efficiency.”
Manufacturing job growth stalled, and some employers are holding back on hiring. JetBlue and General Motors, among others, have pulled their forward guidance, citing extreme policy volatility. Companies are hesitating to expand in a climate where core trade and interest rate policy can shift dramatically overnight.
Wage Growth and Sentiment Paint a Mixed Picture
Average hourly earnings increased only 0.2% in April, bringing the annual wage growth rate to 3.8%—steady, but underwhelming considering inflation’s persistent bite. Real wage growth remains modest, particularly for workers in goods-producing sectors, many of whom now face inflationary pressures due to tariff-driven price increases.
Compounding the issue is falling consumer sentiment. According to the University of Michigan, April saw one of the lowest consumer confidence readings in recent history, with Americans citing economic instability, political risk, and rising costs as key concerns.
Market Reaction: Relief Rally, But Fed Holds the Line
The Dow Jones Industrial Average rose for a ninth straight session, bolstered by hopes that Trump’s wavering stance on tariffs—first imposing them on April 2, then pausing many on April 9—signals eventual retreat. The S&P 500 and Nasdaq also posted solid gains.
Despite that rally, analysts say the Federal Reserve is unlikely to respond with rate cuts anytime soon. The central bank remains in a “wait-and-hold” stance, with officials expected to maintain current rates at their upcoming May meeting. Any changes in monetary policy will likely depend on how trade tensions evolve and whether job growth can be sustained.
Employers Cautious, Not Panicked—Yet
On earnings calls, many executives voiced frustration at the policy whiplash. Some, like major retailers and logistics firms, rushed to hire in Q1—but recent job board data shows those openings already reversing. Indeed.com reported a notable drop in listings for warehouse and logistics workers in late April, suggesting that earlier gains may not stick.
Notably, employers have so far resisted broad-based layoffs. The post-pandemic labor squeeze taught many businesses how painful rehiring can be. But that doesn’t mean hiring will continue apace. “Most companies are in a holding pattern,” said ING economist James Knightley. “They're not cutting yet—but they're definitely not expanding either.”
Looking Ahead
While April’s report offers short-term reassurance, long-term concerns loom. The full impact of tariff disruptions—particularly on manufacturing and agriculture—has yet to materialize. Add in the Trump administration’s immigration crackdown, which has reduced the supply of foreign-born workers in sectors like hospitality and construction, and future job growth could stall even if unemployment edges lower due to a shrinking labor force.
Economists are also watching whether consumer sentiment will further drag on spending and investment. With many businesses adopting a “wait-and-see” attitude, May and June’s data will likely offer clearer signals about whether the labor market can weather continued policy uncertainty—or if this report was merely the eye of the storm.