U.S. Employment (April 2025)

Employment rises by 177k in April as the economy braces for impact

• The U.S. economy added 177k jobs in April, slightly above the consensus forecast of 135k. Revisions for the prior two months subtracted a total of 58k jobs. 
  • Smoothing through the volatility, non-farm payrolls averaged 155k over the last three-months. 
• Private payrolls rose 167k – nearly matching March's 170k – with the largest gains seen in health care & social assistance (+58.2k), transportation & warehousing (+29k) and leisure & hospitality (+24k). Federal hiring declined by 9k and has now shed 29k jobs since January. 
• In the household survey, both civilian employment (+436k) and the labor force (+518k) rose sharply, holding the unemployment rate steady at 4.2%. The labor force participation rate ticked higher by 0.1 percentage points to 62.6%. 
• Average hourly earnings (AHE) rose 0.2% month-on-month (m/m) – following a gain of 0.3% m/m in March. The twelve-month change held steady at 3.8%, while the three-month annualized rate of change dipped to 2.6% – suggesting further downward pressure on the year-ago measure over the coming months. 
• Aggregate weekly hours rose 0.1% m/m, following stronger gains of 0.3% m/m and 0.4% m/m in the two months prior.

Key Implications

• Across the board, this was a healthy employment report. At 177k, job creation is nearly bang-on last month's gain and slightly higher than both the three-and-twelve-month averages of 155k, and 157k, respectively. The breadth of hiring across industries remained healthy. Also encouraging was the uptick in the labor force participation rate, which climbed to a three-month high. The jump in labor supply helped to put further downward pressure on average hourly earnings, with the three-month annualized rate of change slipping to a four-year low.  
• But it's important to not become complacent. The employment survey for April was conducted just a few weeks after the reciprocal tariff announcement on April 2nd, too soon to show a meaningful spike in layoffs. However, heightened trade uncertainty has already started to weigh on economic growth, and the impacts are likely to soon spillover to the labor market – as evidenced by this week's jump in initial jobless claims. With price increases from tariffs in the pipeline and the unemployment rate expected to drift higher, the Fed could soon find itself in a tricky position. Provided inflation expectations remain well anchored, policymakers are likely to look through the inflation shock and deliver a few "insurance cuts" this summer to better support the economy.

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