U.S. payroll growth totals 177,000 in April, defying expectations

Job growth was stronger than expected in April despite worries over the impact of President Donald Trump's blanket tariffs against U.S. trading partners.

Nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the Dow Jones estimate for 133,000, the Bureau of Labor Statistics reported Friday.

The unemployment rate held at 4.2%, as expected, indicating that the labor market is holding relatively stable. The survey of households, which is used to calculate the jobless rate, showed an even stronger gain, with an increase of 436,000 in those who reported holding jobs on the month.

A broader unemployment gauge that includes discouraged workers and those holding part-time jobs for economic reasons, or the underemployed, edged lower to 7.8%. The labor force participation rate ticked higher to 62.6%.

Stock market futures rose following the release as did Treasury yields.

"We can push recession concerns to another month. Job numbers remain very strong, suggesting there was an impressive degree of resilience in the economy in play before the tariff shock," said Seema Shah, chief global strategist at Principal Asset Management. "The economy will weaken in the coming months but, with this underlying momentum, the U.S. has a decent chance of averting recession if it can step back from the tariff brink in time."

The report comes amid an uncertain climate in which Trump kicked off April by slapping "liberation day" 10% across-the-board tariffs on U.S. imports, and threatened a menu of other "reciprocal" duties on dozens of other nations.

However, Trump later decided to put a 90-day hold on the reciprocal tariffs pending ongoing negotiations. In recent days, White House officials have indicated that deals with some of the impacted nations are forthcoming, though there have been no official announcements.

The strong report led traders to push out expectations for an interest rate cut until July, according to the CME Group's FedWatch gauge of futures pricing.

Health care continued to be a leader in job creation, adding 51,000 jobs. Other sectors posting gains included transportation and warehousing (29,000), financial activities (14,000), and social assistance.

The federal government reported a loss of 9,000 jobs on the month amid Trump's efforts, led by Elon Musk and the Department of Government Efficiency, to trim payrolls in the public sector. Federal government jobs have declined by just 26,000 since January, as employees furloughed but still receiving severance are not counted as unemployed, according to the BLS.

Manufacturing saw a slight loss of 1,000 jobs as well.

"This first jobs report post-Liberation Day is much too soon for the impacts of tariffs to show up," said Daniel Zhao, lead economist at job review site Glassdoor. "Even May may still be too early as businesses work down inventories. But today's report does set the benchmark against which we'll measure the tariff impacts."

On the wage side, average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was 0.1 percentage point less than expected and the lowest since July 2024.

Revisions brought previous months' job totals lower than previously reported.

For March, the BLS pulled the initial estimate down by 43,000, while the February number came down to 102,000, a decrease of 15,000.

The report comes just ahead of next week's Federal Reserve policy meeting.

Central bank officials are currently in their quiet period heading into the two-day session that concludes Wednesday. However, in recent days they've expressed greater concern with addressing potential inflation impacts from the tariffs and have indicated a wait-and-see approach before adjusting interest rates.

Markets widely expect the Fed to hold its benchmark short-term borrowing rate steady at the meeting, though they are pricing in a quarter percentage point cut in July with two or three more to follow by the end of the year.

After the report, the president again called on the Fed to lower interest rates.

"Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!" Trump said in a Truth Social post.