The U.S. labor market displayed some resilience in April with a modest slowdown in job growth, even as employers continue to retain workers. However, the outlook is becoming increasingly concerning due to President Donald Trump’s protectionist trade policies, which have elevated economic uncertainty. According to the Labor Department’s employment report, the unemployment rate remained steady at 4.2% last month.
While these figures alleviated some fears of a recession following a GDP contraction in the first quarter, the full impact of the tariffs has yet to filter through. The strong labor market conditions provide the Federal Reserve with justifications to maintain its benchmark interest rates between 4.25% and 4.50%. Olu Sonola, head of U.S. economic research at Fitch Ratings, noted that current conditions reflect resilience rather than a recession, though caution is advised given the potential negative effects of trade policies.
Job growth was reported at 177,000 new positions in April, adjusted from 185,000 in March. While economists had anticipated a lower figure of 130,000, the actual outcome varied widely in predictions. The data also showed a downward revision for February’s payroll numbers.
To keep pace with the working-age population, the economy needs to create around 100,000 jobs monthly. Job growth in healthcare remained strong, adding 51,000 positions, while transportation and warehousing saw an increase of 29,000. However, federal employment has declined from January levels, reflecting the ongoing restructuring efforts by the Trump administration.
Economists predict a more significant drop in federal payrolls by September as severance pay for many ends. Manufacturing payrolls have seen a decline due to the stresses induced by tariffs, with economists warning that business sentiment is deteriorating and could lead to layoffs. Major companies are already adjusting their financial forecasts in light of rising tariff costs.
Despite the current robustness of the labor market, economists expect tangible effects from trade tariffs to emerge in the coming months.