The latest non-farm payrolls data released by the US Bureau of Labor Statistics (BLS) indicate robust employment growth and stable unemployment in the US in April, suggesting that uncertainties surrounding President Donald Trump’s trade policies have yet to have a substantial impact on the labour market.
The BLS reported that non-farm payrolls in the US increased by 177,000 in April, significantly exceeding the estimated increase of 138,000, with the prior reading being an increase of 228,000.
The data reflect a gradual cooling of the job market, indicating that businesses facing heightened tariff uncertainties and financial market volatility have not significantly altered their hiring plans. However, most economists still anticipate that the impact of the Trump administration’s tariffs will become evident in the coming months.
In a report, Olu Sonola, Head of US Economics at Fitch Ratings, stated, “Overall, this is a good jobs report. It shows that the labour market remains resilient, but for now, given the trade policies that could drag down the economy, we should temper our enthusiasm for the future.”
Released alongside the non-farm payrolls data was the US unemployment rate for April, which stood at 4.2%, in line with market estimates and unchanged from the previous month.
Following the data release, the three major US index futures and Treasury yields rose, while the US dollar initially recouped losses before resuming its decline.
Pressure on Employment Outlook
A breakdown of the employment data reveals that growth in the healthcare sector led the gains, with transportation and warehousing employment posting its largest increase since December last year, indicating that businesses are rushing to expand imports ahead of tariff policy implementation, a move that has boosted labour demand. In contrast, the manufacturing sector experienced its most severe output contraction since 2020 last month, leading to job losses.
Meanwhile, the federal government has cut jobs for the third consecutive month—the longest streak of job cuts since 2022—reflecting efforts by Elon Musk-led Department of Government Efficiency (DOGE) to reduce the federal workforce and government spending.
Employment placement firm Challenger, Gray & Christmas noted in a report on Thursday (May 1) that the government has led all US industries in announced job cuts so far in 2025.
Economists believe that as federal spending cuts ripple through to contractors, universities, and other institutions reliant on government funding, at least 500,000 US jobs could be at risk in the future. Economists generally expect job cuts to increase in the coming months as economic uncertainties lead businesses to stall expansion plans.
Other data points show that job openings in March fell to their lowest level since September, while another private hiring report indicates that employers added the fewest jobs in nine months in April.
What’s Next for the US Fed?
Furthermore, regarding the future policy direction of the US Fed, traders still maintain expectations that the Fed will cut interest rates nearly four times this year following the release of the non-farm payrolls data.
Fed officials have stated that they will not rush to cut interest rates until there is greater clarity on the impact of government policies on the economy. It is widely expected that the Fed will keep benchmark interest rates unchanged at its next meeting in May.
On Friday, US President Trump reiterated on social media that the Fed should lower interest rates, stating, “There is no inflation in the US, and the Fed should lower interest rates.” He also noted, “Gasoline just fell below $1.98 per gallon, the lowest in years, grocery prices are down, energy prices are down, and tariffs are bringing in billions of dollars in revenue.”
(Source)