Investing.com - The U.S. economy added more jobs than anticipated in April, but this still represented a drop from the previous month given the heightened economic uncertainty due to U.S. President Donald Trump’s aggressive tariffs policy.
Nonfarm payrolls for the month came in at 177,000, down from a revised lower reading of 185,000 in March, data from the Labor Department’s Bureau of Labor Statistics showed on Friday. Economists had anticipated 138,000.
Meanwhile, the unemployment rate was 4.2%, unchanged from March’s pace.
Average hourly wage growth rose by 0.2% on a month-on-month basis, below March’s 0.3% release.
While jobs growth is slipping, the labor market is still showing a degree of resilience amid a reluctance by employers to let go of workers after struggling to find labor during and after the COVID-19 pandemic.
That said, warning signs are accumulating.
U.S. job openings dropped sharply in March, to their lowest in six months, data released earlier this week showed, private sector payrolls from the ADP disappointed, while there was also a big jump in weekly jobless claims.
Added to this, Thursday’s ISM manufacturing survey on Thursday showed an ongoing contraction in factory activity in April, and the first-quarter gross domestic product figure showed a contraction of 0.3%, something that was almost unthinkable at the start of the year.
The Federal Reserve meets next week, and is widely projected to hold borrowing costs steady when it gives its monetary policy statement.
"The healthy 177,000 rise in non-farm payrolls in April and unchanged unemployment rate will reassure the Fed that there is no need to be hasty in lowering interest rates when it meets next week," said analysts at Capital Economics, in a note.
After cutting by 1 percentage point last year, the Fed has held its benchmark rate at 4.25%-4.5% so far in 2025.
Fed funds futures are factoring in nearly four more 25-basis point cuts by December, according to LSEG data, but Trump’s tariffs loom over policy decisions for central bank officials weighing concerns about a potential economic downturn against worries that tariffs will drive inflation higher.