Tariff Uncertainty Likely to Slow U.S. Job Growth in April

WASHINGTON: U.S. job growth probably decelerated in April due to increased economic uncertainty stemming from President Donald Trump's stringent tariff measures, yet businesses still retained employees, maintaining a lively labour market for the time being. The Labour Department's much-anticipated employment report on Friday is expected to be regarded as outdated and may not provide a definitive gauge of the economy following the contraction of gross domestic product in the first quarter, attributed to a surge in imports as companies sought to preempt tariffs. On April 2, Trump's announcement of "Liberation Day" tariffs initiated extensive duties on numerous imports from the U.S. trade partners, including increasing tariffs on Chinese products to 145 per cent, igniting a trade war with Beijing and tightening financial conditions. Trump subsequently postponed increased reciprocal tariffs for 90 days, a move that economists indicated effectively stalled the entire economy, leaving businesses immobilised and jeopardising a recession if clarity was not achieved swiftly.

"This is a scenario in which the air within the balloon is gradually leaking out," remarked Brian Bethune, an economics professor at Boston College. According to a Reuters survey of economists, nonfarm payrolls probably grew by 130,000 jobs last month following a rise of 228,000 in March. Predictions varied between 25,000 and 195,000 positions created. A portion of the expected decrease in payrolls would result from the diminishing impact of milder weather. The rate of employment increases would exceed the 100,000 that analysts indicate is necessary to match the growth of the working-age population. The unemployment rate is predicted to have remained steady at 4.2 per cent in the previous month. Although the job market remains strong despite employers' hesitance to lay off staff after difficulties in hiring during and post-COVID-19 pandemic, cautionary indicators are building up.

Business optimism keeps declining, and economists predict this will eventually lead to job cuts. Airlines have already retracted their financial projections for 2025, citing uncertainty regarding expenditure on nonessential travel due to tariffs. On Thursday, General Motors reduced its 2025 profit outlook and indicated it anticipated a tariff impact of $4-$5 billion. China has instructed its airlines to halt additional deliveries of Boeing aircraft, while Ryanair, Europe's biggest low-cost airline, warned on Thursday that it may cancel orders for numerous Boeing planes if the tariff conflict results in significantly increased prices. In light of the uncertainty, the Federal Reserve is anticipated to maintain its key overnight interest rate within the 4.25 per cent- 4.50 per cent range next week. Economists anticipate that businesses will cut hours before implementing layoffs. The typical workweek has been consistently decreasing since 2023 and remained stable at 34.2 hours in March.

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"To what extent can the labour market manage and cope with the uncertainty that the administration has introduced into the economy?" inquired Martha Gimbel, executive director of Yale's Budget Lab. "American companies are sturdy, and they can tackle many challenges, but they can't handle everything, and eventually the policy landscape will begin to impact them significantly." The majority of economists anticipate that the impact of the tariffs may become apparent in the so-called hard data, such as employment and inflation figures, by summer. Surveys, such as those conducted by the Institute for Supply Management, the Conference Board, and the University of Michigan, have consistently depicted a bleak economic outlook. The Trump administration's unique and frequently disorderly initiative, led by tech tycoon Elon Musk's Department of Government Efficiency, known as DOGE, aims to significantly reduce the federal government via widespread layoffs and substantial budget reductions, contributing to the escalating labour market threats.

Certain reductions in spending have impacted educational institutions and medical studies. The government, along with the healthcare industries, have been the primary catalyst for job growth. The labour market's strength is expected to be highlighted by robust wage increases. Average hourly wages are expected to have increased by 0.3 per cent, aligning with the increase seen in March. This would elevate the yearly wage growth to 3.9 per cent from 3.8 per cent. This has caused some economists to feel hopeful that the economy might evade the feared stagflation - slow growth coupled with high inflation - or even a recession. "Typically, during periods of stagflation, the labour market hasn't been as robust as it is currently," stated Elizabeth Crofoot, a senior economist at Lightcast. "Provided that people maintain employment, even if their earnings aren't increasing but remain stable, and they believe they can handle some of the price hikes, this will enable the economy to be robust."