US job growth holds in April, but tariff turmoil threatens labour market momentum

March’s job gains were revised down to 185,000 from 228,000, and February’s figures also fell, with combined downward revisions totalling 58,000.

The US labour market added 177,000 jobs in April, beating expectations despite the economic turbulence stirred by President Donald Trump’s escalating trade war. The unemployment rate held steady at 4.2%, according to Friday’s report from the Labor Department, the Wall Street Journal reported.

The better-than-expected job growth offered a brief reprieve to markets rattled by US President Donald Trump’s sweeping tariff announcement on April 2—what he dubbed “Liberation Day.” Though followed by some policy pullbacks and mixed signals later in the month, economists say the broader impact of those trade shocks is still looming.

“This is solid data that no one wants to trust,” said Thomas Simons, chief US economist at Jefferies. He noted that April’s figures mostly reflect hiring decisions made before Trump’s tariff moves, leaving businesses little time to react in the survey window.

Though job gains were broad-based, signs of deeper strain are emerging. Employers in healthcare, financial activities, and social assistance all added workers. Transportation and warehousing also saw a 29,000-job surge—possibly a temporary spike as businesses rushed to frontload imports ahead of expected tariff hikes.

But the broader trend is cooling. March’s job gains were revised down to 185,000 from 228,000, and February’s figures also fell, with combined downward revisions totalling 58,000. Hourly wages also grew more slowly than economists anticipated, both on a monthly and annual basis.

Companies including General Motors and JetBlue Airways have recently withdrawn their full-year earnings forecasts, citing trade policy instability. Few have announced layoffs so far, but many appear to be holding off on new hiring until the policy outlook becomes clearer.

“There’s a lot of anxiety about what tariffs mean for supply chains,” said James Knightley, chief international economist at ING. “The longer this uncertainty lasts, the more cautious businesses will become about hiring and investment.”

The jobs report’s timing also obscures the early fallout from Trump’s federal government overhaul. Employment in federal agencies fell by 9,000 in April—marking a third consecutive month of losses—but that figure likely undercounts the full scope of reductions.

Many federal workers targeted by the Department of Government Efficiency (DOGE), the Musk-led agency charged with trimming bureaucracy, are still receiving severance pay or on administrative leave. Legal challenges have slowed formal terminations. Economists expect the true scale of these cuts to begin surfacing in labour data by the fall.

Adding to labour market uncertainty is the administration’s immigration crackdown. Restrictions at the southern border have sharply reduced the number of foreign-born workers entering the US, tightening labour supply in construction, hospitality, agriculture, and healthcare. That could push the unemployment rate lower—even as overall job creation stalls.

Despite the economic undercurrents, Wall Street cheered the job numbers. The Dow Jones Industrial Average and the S&P 500 both notched their ninth consecutive day of gains on Friday, boosted by the stronger-than-expected employment report and hopeful signs from China about potential trade talks.

President Trump claimed credit for the results on his Truth Social platform:

“Employment strong, and much more good news, as Billions of Dollars pour in from Tariffs... Just like I said, and we’re only in a TRANSITION STAGE, just getting started!!!”

Yet economists remain wary. Samuel Tombs of Pantheon Macroeconomics warned that some hiring, especially in logistics, may reverse as businesses adjust to longer-term trade friction. Indeed, job postings in transportation have already declined since March, according to data from Indeed.

Consumer sentiment has also taken a hit. The University of Michigan’s April reading showed one of the lowest confidence levels on record—suggesting that while jobs remain available, households are nervous about what lies ahead.

For now, the Federal Reserve is unlikely to shift its cautious stance. The central bank is widely expected to leave rates unchanged at its policy meeting next week and to avoid making any strong hints about rate cuts in June.

As Jefferies’ Simons put it, “We’re flying blind into a turbulent patch—and the radar hasn’t caught up yet.”