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US job growth slows marginally in April; unemployment rate steady at 4.2%
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US job growth slows marginally in April; unemployment rate steady at 4.2%
May 26, 2025 12:13 AM

WASHINGTON (Reuters) -U.S. job growth slowed marginally in April, but the outlook for the labor market is increasingly darkening as President Donald Trump's aggressive tariff policy heightens economic uncertainty.

Nonfarm payrolls increased by 177,000 jobs last month after rising by a downwardly revised 185,000 in March, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.

Economists polled by Reuters had forecast 130,000 jobs added last month after a previously reported 228,000 advance in March. Estimates ranged from 25,000 to 195,000 jobs added.

The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population. The unemployment rate held steady at 4.2%.

The report is backward-looking and it is too early for the labor market to show the impact of Trump's on-and-off again tariffs policy.

A flood of imports as businesses tried to get ahead of tariffs weighed on the economy in the first quarter.

Trump's "Liberation Day" tariff announcement ushered in sweeping duties on most imports from the United States' trade partners, including boosting duties on Chinese goods to 145%, sparking a trade war with Beijing and tightening financial conditions.

Trump later delayed higher reciprocal tariffs for 90 days, which economists said was essentially a pause on the whole economy as it left businesses in a state of paralysis and risked a recession if there was no clarity soon.

The labor market continues to show resilience amid a reluctance by employers to let go of workers after struggling to find labor during and after the COVID-19 pandemic, but warning signs are accumulating.

Business sentiment continues to plummet, which economists expect will at some point give way to layoffs. Already, airlines have pulled their 2025 financial forecasts, citing uncertainty over spending on nonessential travel because of tariffs.

General Motors cut its 2025 profit forecast on Thursday and said it expected a $4-$5 billion tariff hit.

China has ordered its airlines not to take further deliveries of Boeing planes. Ryanair, Europe's largest low-cost carrier, on Thursday threatened to cancel orders for hundreds of Boeing aircraft if the tariff war leads to materially higher prices.

Amid the swirling uncertainty, the Federal Reserve is expected to keep its benchmark overnight interest rate in the 4.25%-4.50% range next week. Economists expect companies will reduce hours before resorting to mass layoffs.

Most economists anticipate the tariff drag could become evident by summer in the so-called hard data, including employment and inflation reports.

Surveys, including from the Institute for Supply Management, the Conference Board and University of Michigan, have uniformly painted a dire economic picture.

The Trump administration's unprecedented and often chaotic campaign spearheaded by tech billionaire Elon Musk's Department of Government Efficiency, or DOGE, to drastically shrink the federal government through mass layoffs and deep funding cuts is adding to the rising labor market risks.

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