May 8 (Reuters) - U.S. job growth topped expectations for a second straight month in April - and by a hefty margin - while the unemployment rate held steady, showing the labor market is resilient in the face of the U.S.-Israeli war on Iran and the inflation pressures it has created.

But looking beyond that headline figure, the job market is far from booming. While employers report record overall employment levels, households report employment is shrinking. Moreover, the U.S. workforce is declining at a rapid rate, the participation rate is the lowest in nearly five years and the breadth of hiring across industries continues to be narrower than average.

Here's a look at some of the other dynamics at play in the latest jobs report.

EMPLOYMENT - A RECORD OR NOT?

The Labor Department's monthly employment report is actually two different surveys: one of establishments - employers like businesses and governments - that report how many people were on their payrolls, and one of U.S. households that report whether household members were working at the time the survey was taken. So far this year they tell very different stories.

By the establishment survey measure, which provides the benchmark for the number of new jobs created each month, total employment is at a record high of 158.7 million people holding payroll jobs and has grown by 304,000 so far this year. But by the household survey measure, which provides the benchmark for the national unemployment rate, overall employment has declined by 1.37 million in 2026.

A SHRINKING WORKFORCE

The U.S. labor force - the total of those people with a job or unemployed and looking for one - is smaller today than when President Donald Trump returned to the White House for his second term. There were about 700,000 fewer people in the workforce in April than in January 2025, and it has declined in four of the past five months.

PACE OF LABOR FORCE DECLINE IS HISTORIC

In fact, the workforce has been shrinking at a historic rate since late 2025. About 1.55 million people have left the labor force since it touched a record high last November, a departure wave exceeded over a comparable time horizon only by the short-lived exodus of workers during the COVID-19 pandemic shutdowns in 2020. With households reporting a sharp drop in employment, the drop in the labor force level of about the same magnitude is the only reason the unemployment rate has not risen.

PARTICIPATION RATE IS PLUMMETING

While the jobless rate has held steady, the participation rate - the share of the total estimated U.S. population who are active in the job market either working or seeking work and another key barometer of labor market health - has been dropping swiftly. It has declined for five straight months and is the lowest - outside of the pandemic era - since the mid-1970s.

IMMIGRATION POLICY'S IMPRINT

Trump returned to office promising a crackdown on immigration and his fulfillment of that pledge has left its mark on the labor market. Immigrant workers had accounted for most if not all growth in the workforce and employment under Trump's predecessor, Joe Biden. Trump's policies helped flip that script during the early months of his term last year. Through mid-2025, all job gains and workforce growth were attributable to rising employment and workforce participation by native-born workers, while those levels fell for immigrants. Since the fourth quarter of last year, though, those trends have largely reversed, and overall employment and participation among native-born workers is about where it was when Trump returned to the White House last January. They are down for immigrants but not by as much as they were at mid-year.

HIRING BREADTH IS RESTRAINED

On the establishment side of the report, it bears watching not just how many jobs overall were created in any month, but how broad the hiring was across industries. Hiring in fact has been heavily concentrated in a handful of services sectors, healthcare in particular. The Labor Department's diffusion index tracks hiring breadth, and that shows a slightly greater number of industries with expanding employment than contracting employment in the last few months, but the 12-month average remains tilted to narrowing employment. What's more, the manufacturing sector, which Trump has placed enormous emphasis on reviving through policies like tariffs on imported goods, continues to see poor hiring breadth. In April, the report showed 2,000 manufacturing jobs were lost that month, snapping a three-month run of factory employment gains, and there are 77,000 fewer factory jobs now than when Trump came back to power.

(Editing by Aurora Ellis)