Not a Blockbuster Jobs Report but Enough to Keep Fed on Hold — Evening Brief – 05.02.25
The U.S. economy added 177,000 jobs in April 2025, a decline from March’s revised 185,000 but surpassing the Wall Street median forecast of 130,000, signaling resilience despite tariff concerns. The unemployment rate held steady at 4.2%, as anticipated. This report, the first since President Trump’s April 2 “Liberation Day” tariff announcement, showed no immediate tariff impact, as such effects typically emerge over months.
While not a blockbuster, April’s job growth exceeded the highest Wall Street estimate of 171,000. However, revisions tempered optimism: March’s report was cut from 228,000 to 185,000, and February’s from 117,000 to 102,000, reducing combined employment for those months by 58,000. This marks the third consecutive downward revision.
“There have already been several indications of a cooling labor market -slowing job growth, declining job openings, deteriorating confidence in job availability, etc.- but a downturn is still unlikely to take hold absent a more concerted pickup in layoffs,” Bryan Jordan, chief strategist at Cycle Framework Insights, Inc told Connect.
The strong report bolsters the Federal Reserve’s case for maintaining its hawkish stance at its next meeting on May 7. A weaker report, like April’s ADP report of 62,000, might have prompted dovish signals or rate-cut expectations. However, the data could also embolden the administration to pursue aggressive tariff policies, though manufacturing lost 1,000 jobs, and markets reacted positively to news of potential China trade talks, suggesting tariff escalation could unsettle investors.
Positive developments included a labor force participation rate increase to 62.6% from 62.5%, beating the 62.5% forecast, and a narrowing gap between the Household and Establishment surveys due to a robust Household survey. Wages grew moderately, with average hourly earnings up 0.2% month-on-month to $36.06, and annual wage growth steady at 3.8%, below the 3.9% expected, signaling healthy but non-inflationary gains. Weekly hours worked held at 34.3, revised up for March, hinting at potential future hiring.