April Jobs Report Forecasts Show Stable Growth, but Impact From Federal Layoffs and Tariffs Looms

Key Takeaways

• Job growth is forecast to remain steady in April, though slower than in March.
• Early signs of impact from federal workforce cuts, trade policy shifts, and immigration changes may emerge, with broader effects likely in the coming months.
• Economists still expect a June rate cut, and Friday’s jobs report is unlikely to significantly shift that outlook.

Forecasts for the April nonfarm payrolls report indicate that the US labor market continued to add jobs at a stable pace. But with federal workforce cuts, rapidly changing trade policy, and immigration policy shifts, the labor market could begin to slow in the coming months.

According to FactSet, economists predict the US economy added 135,000 jobs in April, lower than the 228,000 added in March. Meanwhile, the unemployment rate is forecast to remain unchanged at 4.2%.

Jeffrey Roach, chief economist for LPL Financial, characterizes the overall labor market as “stable.” He forecasts growth will come in at 150,000 jobs, moderately higher than the consensus estimate. “We are seeing an economy that is slowing down, even before any shock and awe from trade negotiations or tariff arrangements,” he says. “However, we are still in a decent spot. Businesses are not necessarily adding to payrolls at the breakneck speed they had been in previous years, but they are not shedding jobs either.”

April Jobs Report Forecast Highlights

• Job report release date and time: Friday, May 2, at 8:30 a.m. EDT
• Nonfarm payroll employment is forecast to fall to 135,000 versus the 228,000 increase in March, according to FactSet.
• The unemployment rate is forecast to remain unchanged at 4.2%.
• Hourly earnings are projected to rise 0.3% monthly from 0.3% in March.

Gus Faucher, chief economist for PNC Financial Services Group, forecasts job growth will come in at 150,000, and he expects the unemployment rate to remain steady at 4.2%.

In a research note published Tuesday, Lydia Boussour, senior economist at EY, forecast that 65,000 jobs were added in April, three times fewer than in March and less than half of the consensus estimate. “In April, we see two notable downside risks to headline payroll growth,” she wrote. “The payroll survey for the jobs report was conducted the week after the April 2nd reciprocal tariff announcement, when uncertainty and volatility were extremely high which could have weighed on hiring decisions. Moreover, April is a month when seasonal factors are substantially negative, especially in services industries.”

In the services sector, Boussour expects a decline in leisure and hospitality payrolls, along with weaker gains in retail and transportation. On the goods side, she anticipates contractions in manufacturing and construction.

Meanwhile, Roach expects job gains in professional and business services, as well as healthcare. He adds that construction could also see strong growth, particularly in residential building and utility power centers.

Incoming Impacts From Policy Changes

Economists expect the Trump administration’s federal workforce layoffs, along with the impact of trade and immigration policies, to start showing up in the April jobs report and in the months ahead.

“We’re going to start seeing the beginnings of a leaner federal payroll,” Roach says. While he doesn’t expect cuts as dramatic as those under President Bill Clinton—who eliminated nearly 400,000 federal jobs—he notes that in the most extreme scenario, some of the jobs reports over the next few months could show a couple hundred cuts.

Faucher expects a federal payroll gain of 10,000 in April, and he notes that due to buyouts, a chunk of layoffs won’t show up until later this year. “The federal workers that took the buyouts are still on the payroll until those buyouts expire,” he says. Additionally, he thinks hiring at the state and local levels could help offset the federal cuts.

On tariffs and trade policy, Roach says he doesn’t expect to see much impact in the April report. While some layoffs in shipping and at ports are possible, he expects more significant effects to emerge in the months ahead.

Meanwhile, Boussour wrote that “the steep tariff increases and the surge in uncertainty and financial market volatility will result in a more pronounced labor market downshift than previously anticipated.”

Regarding immigration, Faucher does not expect to see much impact in April’s report, but he notes that in the long run, restrictions on immigration lead to weaker job growth. “As we get toward the end of the year and into 2026, we would expect to see slower structural underlying trend job growth because of restrictions on immigration and a restricted labor force,” he explains.

Wage Growth Expected to Remain Steady in April

Wage growth is expected to rise 0.3% in April, matching the pace seen in March. Faucher also projects a 0.3% increase and anticipates that this steady rate will continue in the near term.

Looking ahead, however, he points to mixed forces that could influence wage trends. “Higher inflation and restrictions on immigration may lead to stronger wage growth, but at the same time, a softening labor market later in the year could lead to less competition for workers and slower wage growth,” he says.

Will the Fed Cut Interest Rates in 2025?

Roach expects the Fed to cut rates at its June meeting. “We do have a well-communicated path that the Fed has laid out,” he explains. “Inflation continues to move in the right direction, even though we are still above the 2% target.” He also says that April’s payroll number is unlikely to influence the Fed’s thinking too heavily. “Once unemployment ticks up in a material way, they really have to think about the risk of keeping rates too high.” He notes that the unemployment rate is currently low enough to allow the Fed to focus most of its attention on the inflation mandate.

Faucher similarly believes the April report is unlikely to alter the Fed’s stance. However, he notes that if job growth falls well short of expectations—adding 50,000 jobs or fewer—a rate cut could be on the table for May. Barring such a sharp slowdown, he anticipates four quarter-point cuts in the second half of 2025. Bond futures markets are currently pricing in 57% odds that the Fed cuts rates by a quarter-point in June.