Resilient US adds 177,000 jobs; unemployment stays at 4.2%
The United States has recorded an addition of 177,000 jobs, indicating a degree of resilience in the labor market, while the unemployment rate remains unchanged at 4.2%. American employers added a stronger-than-anticipated 177,000 jobs in April, indicating a robust job market despite the challenges posed by President Donald Trump’s trade wars. Hiring decreased marginally from a revised 185,000 in March and exceeded economists’ forecasts of a modest 135,000. The unemployment rate held steady at a low 4.2 percent, as reported by the Labour Department on Friday.
President Donald Trump’s aggressive and unpredictable policies, including substantial import taxes, have cast a shadow over the economic outlook and the job market, heightening concerns that the American economy may be on the brink of recession. However, Friday’s report indicated that the adverse effects have not yet manifested in the labor market. The labor market remains resilient despite the prevailing uncertainties stemming from the trade war, according to Christopher Rupkey, chief economist at fwdbonds, a financial markets research firm. Politicians should recognize the fortunate position they find themselves in, as companies continue to retain their employees in the face of looming challenges that may further decelerate economic growth in the latter half of the year.
Transportation and warehousing companies experienced an increase of 29,000 jobs last month, indicating that firms are preparing by accumulating inventory ahead of impending tariffs on essential imported goods, which are likely to elevate prices. Healthcare companies contributed approximately 51,000 jobs, while bars and restaurants added nearly 17,000, and construction firms increased their workforce by 11,000. Manufacturing facilities experienced a reduction of 1,000 positions.
Revisions by the Labour Department have resulted in a reduction of 58,000 jobs from the payroll figures for February and March. Average hourly earnings increased by 0.2 percent from March and 3.8 percent year-over-year, approaching the 3.5 percent threshold that analysts consider aligned with the Federal Reserve’s target of 2 percent inflation. The report indicated that 518,000 individuals joined the labour force, with a slight increase in the percentage of those employed or actively seeking employment.
According to Boston College economist Brian Bethune, there are currently no significant negative impacts on the employment market, as he stated prior to the report’s release. Yet numerous economists express concern that the US job market may decline if economic growth is adversely affected by trade wars. The substantial tariffs imposed by Trump on imports to the United States are expected to increase expenses for both American consumers and businesses reliant on foreign supplies. They also pose a risk to the pace of economic expansion.
The immigration crackdown poses a significant challenge for hotels, restaurants, and construction firms in their efforts to fill job vacancies. Through the elimination of federal employees and the termination of federal contracts, Elon Musk’s Department of Government Efficiency poses a significant threat to employment both within the government and in the broader economy. Looking ahead, we anticipate that the significant tariff hikes and the rise in uncertainty alongside financial market volatility will lead to a more marked decline in the labor market than previously expected, as noted by Lydia Boussour, senior economist at the accounting and consulting firm EY, in her recent commentary. Significant reductions in the federal workforce, along with the termination of numerous government contracts, are expected to hinder payroll growth in the upcoming months.
A deceleration in immigration is likely to exert pressure on labor supply dynamics, thereby further limiting job growth. We anticipate the unemployment rate increasing to approximately 5 percent by 2025. Trump’s policies have unsettled financial markets and instilled fear among consumers. The Conference Board, a business group, reported Tuesday that Americans’ confidence in the economy has declined for the fifth consecutive month, reaching its lowest point since the beginning of the COVID-19 pandemic. American workers possess at least one advantage. In light of the ambiguity surrounding the repercussions of Trump’s policies, a significant number of employers are hesitant to terminate employees. This caution stems from the challenging experience of rehiring after the extensive yet brief layoffs during the 2020 COVID-19 recession. Millions of individuals were laid off, and reintegrating them into the workforce proved to be a significant challenge, according to Boston College’s Bethune. Currently, both the unemployment rate and the weekly claims for jobless benefits are low when viewed through a historical lens.
The federal government’s workforce experienced a decline of 9,000, adding to the 17,000 job losses recorded in February and March. Nevertheless, the complete impact of Musk’s DOGE reductions may not be fully evident at this time. For one thing, Bethune observed, the job cuts mandated by the billionaire’s DOGE continue to face legal challenges. Additionally, a portion of individuals departing from federal agencies were compelled to take early retirement, which means they are not reflected in the Labour Department’s unemployment statistics.
Robust employment figures and a low unemployment rate are expected to maintain the Federal Reserve’s current stance, as it requires time to assess the economic repercussions of tariffs. Federal Reserve Chair Jerome Powell has emphasized that the duties are expected to elevate prices in the near term, prompting the central bank to be cautious regarding the possibility of increased inflation. The Federal Reserve generally combats inflation through the implementation of elevated interest rates, making it improbable that it will reduce its primary short-term rate in the near future. It may alter its trajectory and lower rates should layoffs increase and unemployment rise, yet Friday’s report indicates that this is not currently the case.
