The pace of US employment growth is most likely to slow down in April due to increased economic uncertainty.
The Bureau of Labor Statistics is set to report the latest payroll data on Friday mornings. The forecast was an increase of around 133,000. This is down from the 228,000 jobs added in March, but close to the historic monthly average. The unemployment rate was predicted to remain unchanged at 4.2%.
Preparing Friday’s report included discussions on April 2nd about fallout from President Donald Trump’s “Liberation Day” tariff speech and subsequent suspensions of national tariffs.
The announcement of tariffs has created massive uncertainty and has overturned the market, but some of the worst effects seen in slowing port shipments and hiatus jobs have recently begun to emerge.
“Despite the impact of (now suspended) “mutual tariffs” on global trade, the proverb “tide” of economic and supply disruptions caused by tariffs, Matthew Weller, global research director at Forex.com told a client this week.
Even without tariffs, other Trump policies could be putting dampers on job growth.
It accounts for around 80% of all employment growth in the economy, mainly during the period that won the end of President Joe Biden’s presidency and the end of Trump’s second term, according to the government, health and social assistance, leisure and hospitality and Vanguard Financial Group.
Currently, the first two sectors face further headwinds from cuts related to Trump’s government efficiency projects, Vanguard said, but he said leisure and hospitality could face a decline in the labor pool due to Trump’s immigration crackdown.
In general, April is also the slow month for employment, and in the services industry in particular, an analyst at EY Group said in a memo.
Meanwhile, analysts at Bank of America were hoping for a much stronger report. Some companies, primarily in trade and transport, may have driven away personnel in the short term as a tariff-inducing surge in consumer goods orders was underway.
“So, during that time, these sectors are likely to show benefits for jobs on the higher side,” a Bank of America analyst said.
The economy is navigating deep cross-currents. Despite the shipment data showing signs of serious distress, the stock market has largely recovered from the initial turmoil of Trump’s “liberation day” speech, just as investors want to trade. The S&P 500 has returned to its level before April 2nd, but is below the all-time high of 8%, notched on February 19, about a month after Trump’s second presidency.
And while many companies have retracted guidance that they have either restrained or completely retracted to economic expectations for the year, other companies, particularly some of the biggest names of technology, have sailed relatively unharmed until now. Microsoft shares have risen nearly 20% in the past month, but much of its profit came on recent days as investors were aware of what Morgan Stanley called “one of the most powerful quarters in recent memory.”
Meanwhile, businesses continue to announce plans for employment or expansion in the US, but in some cases it was not clear whether plans were already in progress. On Thursday, the Wall Street Journal reported that Kimberly Clark is planning to create 900 jobs as it invested $2 billion and increased US manufacturing capacity. Hyundai, Johnson & Johnson, nvidia and Toyota made similar announcements. It has been promoted by Trump recently.
Still, the threat from tariffs lies on many businesses. Gross domestic product fell negative in the first quarter, and consumer sentiment remains at its 10-year low. CNBC reported Thursday that the U.S. Chamber of Commerce is urging the Trump administration to immediately implement a “tax exclusion process” on businesses that have a different impact on their duties, especially small businesses.
“We are deeply concerned that many small businesses will suffer irreparable harm, even if it only takes weeks or months to reach the agreement,” Chamber CEO Suzanne Clark wrote in the letter.
“The Chamber of Commerce calls for the administration to take immediate action to save American small businesses and avoid a recession,” she wrote.