April Jobs Report Shows Hiring Remains Solid, for Now

The US economy continued to churn out new jobs at a healthy pace in April, even as economists and businesses brace for the negative impact of President Donald Trump’s trade wars.

The solid reading on hiring likely leaves the Federal Reserve on hold when it comes to interest rate cuts, as officials look down the road for how tariffs will affect economic growth and inflation. Trump’s tariffs, which are partially paused until July, are seen as likely to slow the economy and raise prices for consumers. However, the bond market now sees a Fed rate cut as increasingly likely in July.

The US economy added 177,000 jobs in April, according to the latest report from the Bureau of Labor Statistics. This was above economist forecasts but down from March. Economists predicted the US economy would add 135,000 jobs in April. The unemployment rate held steady at 4.2%, within the range seen for the past year.

The government’s report revised down its previous estimate for new job creation in March to 185,000 from an originally reported 228,000, but it slightly revised up its previous estimates for February.

“Job gains are still proceeding at a solid pace for now,” says Preston Caldwell, senior US economist at Morningstar. “Private sector job gains have held up fine in recent months. It’s too early for tariffs to be impacting the job figures, which reflected the pay period including April 12. Nor would the fact that real GDP growth was negative in Q1 2025 be reason for a pullback in job growth.”

April Jobs Report Key Stats

• Total nonfarm payrolls rose by 177,000 versus a downward-revised 185,000 in March.
• The unemployment rate was unchanged at 4.2%.
• Average hourly earnings rose by 6 cents, or 0.2% percent, to $36.06.

Report Shows Only a ‘Minor Slowdown’

Overall, payroll growth has only seen a “minor slowdown,” Caldwell says, pointing to a 1.2% annualized pace in the three months ending April 2025, down from 1.8% growth in the prior three-month period through January. In year-over-year terms, employment growth came in at 1.2%, roughly where it has been since mid-2024. During the comparison pre-pandemic period of 2017-19, employment growth averaged 1.5%. This leaves job growth at a “still quite solid” pace.

Within the report, hiring rose in healthcare, transportation and warehousing, financial activities, and social assistance. Meanwhile, federal government employment declined by 9,000 in April and is down 26,000 since January. “That’s short of the reductions tallied by the New York Times, which include 58,000 firings and 76,000 employees who accepted a buyout offer,” Caldwell says. “Employees aren’t removed from the payroll figures while they’re still receiving severance, which could be one driver of the discrepancy. Also, ongoing court challenges have held up many of the terminations.”

On the wage front, the BLS reported that average hourly earnings rose 0.2% in April. Caldwell notes that earnings growth came in at a 3.9% year-over-year on a three-month average, just below the the 4.0% averaged in 2024, “and not far from the 3.5% rate that should be consistent with 2% inflation.”

When Will the Fed Cut Rates?

The jobs report is seen cementing that the Fed will keep rates steady at its May and June meetings. However, in the bond market, odds are rising that the central bank will cut rates in July. According to the CME FedWatch Tool, bond futures traders peg the chances of a Fed rate cut in July at over 56%, up from 44% on Thursday.

“The Fed won’t be swayed much by today’s report,” Caldwell says. “The labor market lags the rest of the economy, so it will be gleaning insights on tariff impact from more forward-looking indicators. It remains extremely unlikely we’ll see a cut in May. There is some possibility of a June cut, but in our view, the Fed will likely wait until July, as it needs ample data gauging the inflationary consequences of tariffs.”