The economy added 177,000 jobs in April, and the unemployment rate was 4.2%, the Bureau of Labor Statistics reported Friday.
Investors had expected roughly 133,000 new jobs and for the unemployment rate to hold steady at 4.2%.
The interpretation
Dan North, a senior economist with Allianz Trade Americas, told the Washington Examiner that the jobs report is solid and the headline number beat expectations. He said, though, that the jobs situation could worsen as President Donald Trump’s tariffs agenda takes hold.
“So for now, let’s walk away and say good report, economy did well in April, but we can still hold our breath for the next report,” North said.
What it means … for Trump
Friday’s report shows that the labor market maintained momentum in April. More jobs were added than most economists anticipated, and the unemployment rate held steady.
The numbers suggest that, for all the recent talk of recession, Trump has room and time to pursue his agenda.
Trump’s actions so far have dramatically raised uncertainty. In particular, the rollout of tariffs on a scale unseen since before the Great Depression has damaged consumer confidence and led businesses to worry about supply chains. Trump is also working with congressional Republicans to pass a massive fiscal overhaul that would extend tax cuts and possibly cut some federal spending.
Democrats would use any weakness in the labor market to place blame on Trump and his “Make America Great Again” agenda.
What it means for … the Fed
Friday morning’s report did little to change investor expectations that Federal Reserve officials will move to cut interest rates in June.
After a long period of very high interest rates designed to quash inflation, the Fed finally began cutting short-term rates in September.
The underlying reality
Friday’s report suggests that job growth accelerated, if anything, in April.
It is helpful to look at the overall trend for the labor market. Even after downward revisions to the growth in February and March, the three-month moving average of job gains rose in April to 155,000. That is still above the rate needed to keep up with population growth, though.
Roughly 114,000 new payroll jobs are needed each month to keep unemployment from rising, according to the Federal Reserve Bank of Atlanta. Separate estimates that take into account the full extent of recent immigration put the number as high as 200,000, although that may have changed in recent months, as the Trump administration has dramatically curbed unauthorized border crossings.
Prime-age employment, relative to the overall population, is strong by historical standards, although it appears to have peaked in recent months.
Recession watch
The unemployment rate, taken from the jobs report’s household survey, is still low by historical standards. It stayed at 4.2% in April after gradually creeping up over the past year.
Recessions entail a rising unemployment rate.
Friday’s data suggest that the U.S. labor market is still moving away from triggering one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, signaled the start of all postwar recessions.
The indicator had been triggered in mid-2024 but is no longer signaling a recession.
Federal government employment
Federal government employment fell by 9,000 in April and is now down about 26,000 since Trump came into office. The number of federal employees is a key statistic to watch as Trump and Department of Government Efficiency leader Elon Musk have aimed to reduce the federal workforce significantly.
Other industries
The leisure and hospitality sector in the past year has finally exceeded the employment levels it reached in February 2020, right before restaurants and bars were forced to shut down across the country. It has continued to grow steadily.
Construction employment has remained robust, even as the housing market has taken a massive hit over the past few years as mortgage rates have soared alongside the Fed’s rate hikes. That’s in part because of a huge backlog of construction of multifamily housing over the past year. Economists will watch closely for any sign of slowing hiring in construction.
Unemployment rates by race and ethnicity
The household survey also includes unemployment rates by race and ethnicity. Rates for all groups neared record lows in the past few years.
Unemployment rates rose slightly for white, black, and Hispanic workers in April but fell for Asian workers.
