Trump’s aggressive and unpredictable policies — including massive import taxes
— have clouded the outlook for the economy and the job market and raised fears that the American economy is headed toward recession.
But Friday’s report showed the damage isn’t showing up in the labour market yet. “The labour market refuses to buckle in the face of trade war uncertainty,” Christopher Rupkey, chief economist at fwdbonds, a financial markets research firm. “Politicians can count their lucky stars that companies are holding on to their workers despite the storm clouds forming that could slow the economy further in the second half of the year.”Transportation and warehousing companies added 29,000 jobs last month, suggesting that companies have been stocking up before essential, imported goods are hit with a wave of new tariffs, driving prices higher.
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Healthcare companies added nearly 51,000 jobs and bars, restaurants almost 17,000 and construction firms 11,000. Factories lost 1,000 jobs.
Labor Department revisions shaved 58,000 jobs from February and March payrolls.
Average hourly earnings ticked up 0.2% from March and 3.8% from a year ago, nearing the 3.5% that economists view as consistent with the 2% inflation the Federal Reserve wants to see.
The report showed that 5,18,000 people entered the labour force, and the percentage of those working or looking for work ticked up slightly.
“We are not seeing right now any really adverse effects on the employment market,” Boston College economist Brian Bethune said before the report came out.
Yet many economists fear that the US job market will deteriorate if economic growth takes a hit from trade wars.
Also read: US economy shrinks for first time since 2022 amid import surge
American workers have at least one thing going for them. Despite the uncertainty about fallout from Trump’s policies, many employers don’t want to risk letting employees go – not after seeing how hard it was to bring people back from the massive but short-lived layoffs of the 2020 COVID-19 recession.
Solid hiring and low unemployment will likely keep the Federal Reserve on the sidelines as it takes time to evaluate the impact of tariffs on the economy. Fed chair Jerome Powell has underscored that the duties are likely to push up prices in the coming months, making the central bank wary of the potential for higher inflation.
The Fed typically fights inflation with higher interest rates, so it is unlikely to cut its key short-term rate anytime soon. It might change course and reduce rates if layoffs spiked and unemployment rose, but Friday’s report suggests that isn’t happening yet.
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