Core Summary

  • U.S. nonfarm payrolls rose by 115,000 in April, beating expectations, as employers showed resilience amid the highest tariffs since the 1930s and a war-driven surge in fuel prices.
  • The unemployment rate held steady at 4.3%, following a strong gain of 185,000 jobs in March. The Bureau of Labor Statistics reported job growth across several industries, including retail, warehousing, healthcare, and transportation.
  • Chicago Fed President Austan Goolsbee said that after months of weakness concerns, there is "not much evidence that the labor market is falling apart." He said on CNBC that "we've been stable but not strong" for 18 months, adding that "we're in a low-hiring, low-firing environment."

In-Depth Analysis

Over the past year, some businesses have adapted to lower taxes, reduced immigration, higher import tariffs, and other changes that typically lead to wage adjustments.

"Many businesses are making up for hiring and investment decisions they delayed last year due to tariff uncertainty," said Bill Adams, chief U.S. economist at Fifth Third Commercial Bank.

Some companies are revising their workforce plans in response to the sudden surge in fuel prices triggered by the war with Iran and the prospect that artificial intelligence could boost productivity.

Adams noted in a report that overall, the labor market is "gradually shifting from a low-hiring, low-firing pattern to a moderate-hiring, low-firing pattern," supported by tailwinds such as tax cuts, increased federal spending, and Federal Reserve rate cuts in 2025.

Goolsbee said that as the labor market shows signs of stability, the Fed needs to turn its attention to curbing inflation, which has exceeded the central bank's 2% target for five consecutive years.

"Inflation has been underperforming, and recent trends are unfavorable," Goolsbee said, adding that price pressures were already too high even before oil prices spiked following the start of airstrikes by U.S. and Israeli warplanes on February 28.

Since the war broke out on February 28, global benchmark Brent crude futures have surged about 44%, from $70 to $101 per barrel.

Goolsbee said services inflation is particularly troublesome.

"This is not from tariffs, nor from oil prices—for several months now, this data has been above comfortable levels and trending unfavorably," he said.

"We must watch this closely, because if everyone starts to expect inflation to return to levels seen a few years ago, we as a central bank will be in trouble," he said.

After forecasting at least one rate cut this year, interest rate futures traders now see an 89% probability, according to the CME Group's FedWatch tool, that policymakers will keep the federal funds rate unchanged or raise it by at least 25 basis points this year.

The Federal Reserve has held its benchmark rate in a range of 3.5% to 3.75% through the first three meetings of 2026.

At the central bank's April 28-29 meeting, three policymakers favored holding the federal funds rate steady but dissented against continuing to lean toward lowering the main rate.

Since then, at least three more Fed officials have indicated they favor issuing a neutral policy statement that prioritizes neither curbing inflation nor reducing unemployment. Congress has mandated the Fed to ensure maximum employment and price stability.