April Job Creation Slows, Beats Expectations

Companies slowed hiring in April, but not as much as expected, as they braced against the potential impacts from President Donald Trump’s tariffs. Payrolls rose by 177,000 jobs last month, according to the latest employment report from the U.S. Bureau of Labor Statistics.

The job gains for February and March were revised down by a combined 58,000 jobs, and the April unemployment rate held at 4.2%, near historic lows.

“April’s jobs report exceeded expectations, highlighting the labor market’s resilience amid ongoing economic uncertainties,” said Amy Glaser, senior vice president at Adecco. “Despite concerns over recent trade policies, the unemployment rate held steady. We also saw many employers continue to add jobs, particularly in sectors like health care.”

Employment trended up in health care, transportation and warehousing, and financial activities, while federal government employment fell.

“Given the spate of bad economic news this week, including falling GDP in Q1 2025, and a significant rise in unemployment claims, there was a major question as to whether today’s report would provide further evidence of a softening economy and labor market,” said Justin Ladner, a labor economist at SHRM. “Instead, the labor market continues to defy expectations and remain remarkably resilient.”

Ladner noted that the report does not fully capture critical current labor market conditions, including that federal civilian workers on administrative leave or deferred resignation are still counted as employed, and said the timing of the survey means that potential job losses stemming from tariff increases at the beginning of the month were unlikely to be captured in the report.

“For these and other reasons, today’s report — although encouraging — likely fails to capture significant softening in certain parts of the labor market that one would expect to become more apparent in the months ahead,” he said.

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Daniel Zhao, lead economist at Glassdoor, agreed, saying that the full impact of tariffs will take many months to play out.

“Ultimately, today’s jobs report highlights a job market that was growing at a moderate pace before the tariff shock arrives in full force,” he said. “Even the May jobs report [next month] may still be too early for tariff impacts to begin showing up. Many shipped goods were already en route when the tariffs went into effect, and inventory buildup from tariff front-running should sustain businesses in the immediate term. It’s likely the full impact of the tariffs won’t be clear until the summer or fall.”

He added that how the tariffs are implemented will play a big part in their impact.

“With tariff policy shifting on a near-daily basis, forecasting the economic impact is near-impossible, and this also creates an additional drag on economic activity as businesses are faced with enormous uncertainty, making it difficult to go forward with investment or hiring plans,” he said.

Consumer confidence has fallen to its lowest level since May 2020, largely due to tariff concerns and growing fears of a recession.

“Overall, the labor market is not in crisis but at a crossroads,” said Ger Doyle, U.S. country manager at ManpowerGroup. “Hiring remains steady but slow as employers take a more strategic and deliberate approach while prioritizing talent retention. Our real-time data shows job openings down 11% year-over-year, signaling a cooling environment. Many are adopting a ‘wait and watch’ stance as they continue to closely monitor economic signals.”

Industry Breakdown

Health care continued to be a leader in job creation, adding 51,000 jobs, followed by transportation and warehousing (29,000) and financial activities (14,000).

“Transportation and warehousing more than doubled its 12-month average, a possible sign of employers building up inventory in advance of tariffs,” said Cory Stahle, an economist at the Indeed Hiring Lab.

Transportation and warehousing employers added an average of 12,000 jobs per month over the past year.

“Once backlogs from tariff front-running fade, though, transportation employment may be the first industry to see impacts from the tariffs as demand for shipping goods drops,” Zhao said.

Sam Kuhn, an economist at Appcast, noted that consumer sentiment has cratered while inflation expectations have risen significantly.

“Businesses are avoiding passing off price hikes to consumers for as long as possible in case trade policy changes,” he said. “In the short term, this has had a positive effect on sectors like transportation and warehousing as consumers and businesses front-loaded purchases ahead of tariff announcements. For example, local freight trucking, an industry that has been contracting for more than a year now, added 2,300 jobs. Air transportation added 2,900. Warehousing and storage overall added 9,800 jobs — the strongest month of job growth in more than two years.”

The federal government reported a loss of 9,000 jobs in April, amid efforts by the U.S. Department of Government Efficiency to trim headcount in the public sector. Manufacturing saw a loss of 1,000 jobs.

“Manufacturing is also at risk due to tariffs,” Zhao said. “Manufacturing employers reliant on imported inputs may also begin furloughing workers if their input costs are prohibitively high.”

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Unemployment Holds

The unemployment rate was unchanged at 4.2% in April and has remained in a narrow range of 4% to 4.2% since May 2024. About 7.2 million people are considered unemployed. A broader unemployment measure that includes discouraged workers and those holding part-time jobs for economic reasons, or the underemployed, edged lower to 7.8%.

A more troubling sign shows that people are jobless for longer.

“The median duration of unemployment continued to rise, and the share of workers who were long-term unemployed — out of work for 27 weeks or more — rose to 23.5% in April, the highest share in three years,” Stahle said. “Both suggest that it is taking longer for unemployed workers to find new opportunities and reinforce a growing divide in the market between those out of work and those who are employed.”

The labor force participation rate ticked higher to 62.6% from 62.5%.

“The prime-age labor force participation rate rose to 83.6%, a positive sign after declining for more than six months following last summer’s peak,” Kuhn said. “A potential sign of underlying stress is the gradual rise of part-time workers that would like full-time work. That figure reached a post-pandemic high of 1.26 million workers.”

Wages Moderate

Average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was less than expected and the lowest since July 2024.

“The modest uptick in wages suggests that the labor market, despite its recent stumbles, remains a reliable means for households to drive economic activity by having income to spend on goods and services,” said Noah Yosif, chief economist at the American Staffing Association. “These data points suggest that the Federal Reserve can remain patient in waiting for inflation to come down, suggesting another hold on interest rates next week.”