Jobs Report Beats Expectations At 177,000 Even With Tariff Uncertainty

The job report for April showed 177,000 new positions — 33% higher than the median forecast of 133,000 from economists polled by Dow Jones. The unemployment rate was 4.2% and average hourly earnings increased by 3.8% year-over-year.

Employment for February and March were revised down by 58,000.

The larger gains were in healthcare, transportation and warehousing, financial activities, and social assistance. Federal government employment declined but much less than the Trump administration and Department of Government Efficiency (DOGE) suggested.

Most Numbers Seemed Stable Month-Over-Month

Much of the basis jobs data showed little or no change between March and April. The 4.2% unemployment rate was the same as in March and has stayed between 4.0% and 4.2% for 12 months since May 2024. The number of unemployed people was 7.17 million, up 82,000 from March, although up 10.4% from April 2024.

The labor force was 171,109,000, up 518,000 from March and a 1.9% increase over the year before.

Unemployment rates for adult men (4.0%), adult women (3.7%), teenagers (12.9%), whites (3.8%), blacks (6.3%), Asians (3.0%), and Hispanics (5.2%) showed little or no change.

The long-term unemployed — people looking for work but without a job for at least 27 weeks, or more than 6.2 months — were 23.5% of all unemployed people. As the Federal Reserve Bank of St. Louis graph of the percentage of long-term unemployment since 1948 shows, given spikes after recessions, there is a general trend for people taking longer to get a new job. In January 1948 the long-term unemployed were 6.3%.

People employed part-time for economic reasons, which means they want full-time work but couldn’t find it or an employer reduced their hours, were at 4.7 million.

As a percentage of all employed people, it is historically relatively low, as the St. Louis Fed graph above shows.

Where Did The Jobs Come From?

The 177,000 additional jobs were “roughly in line” with the 152,000 average monthly gain over the last 12 months, as the Bureau of Labor Statistics said. Healthcare added 51,000 jobs. Financial services were up 14,000, and social assistance, an additional 8,000.

Transportation and warehousing saw an extra 29,000, compared to the average monthly 12,000 over the previous 12 months. That is interesting given the uncertainty around tariffs and international trade. May could show a change.

Federal government employment dropped, but by only 9,000, not the tens or even hundreds of thousands frequently discussed. Since January, the total has been down by 26,000. A masking factor could be that employees on paid leave or receiving outgoing severance pay are considered employed.

The Bigger Economic Picture

ManpowerGroup called the report a “welcome surprise,” but one with “cracks in the foundation” showing strain in the labor market. Their data suggests an 11% year-over-year reduction in job openings as companies “take a more strategic and deliberate approach” to hiring, incorporating a “wait and watch” approach.

“Employers are no longer aggressively expanding their workforce, fewer individuals are leaving their jobs, and those who do are finding it challenging to re-enter the job market,” wrote ManpowerGroup U.S. Country Manager Ger Doyle in emailed commentary.

Nationwide Chief Economist Kathy Bostjancic wrote that when factoring in the downward revisions for February and March, they “continue to foresee a significant weakening in employment conditions in the coming months as the negative supply impact from the tariffs permeates the economy.”

Markets “breathed a sigh of relief,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management in emailed comments. Unless Trump changes direction in July when the 90-day additional tariffs pause ends, “we will see market action similar to the first week of April.”