The Bureau of Labor Statistics estimated on May 8 that U.S. employers added 115,000 jobs in April, prompting some cautious optimism about hiring, while higher oil prices linked to the Iran war and increased AI adoption pose risks to the labor market.
The April estimate comes in above forecasters’ expectations, but below the department’s now-revised estimated gain of 185,000 jobs added in March. Although U.S. employers shed an estimated 156,000 jobs in February, every other monthly report so far this year has indicated that hiring is on track for 2026, compared with last year, when employers added an average of just 15,000 jobs per month. By comparison, U.S. employers will add an average of more than 150,000 jobs per month in 2024.
The unemployment rate stood at 4.3% in April. Officials and analysts view the unemployment rate as solid but say it doesn’t tell the whole story as immigration crackdowns and retirements of an aging workforce are limiting the supply of job seekers.
Still, positive job growth and a solid unemployment rate could prompt the Federal Reserve, which is concerned about a slowdown in the labor market, to turn its attention back to inflation as an extended conflict in the Middle East has pushed prices higher.
How is the job market overall?
After a year in which job growth stalled due to economic uncertainty, economists deemed the job market a “low hire” and “low fire” environment. LLC.org business expert Sam Taylor calls this the rise of the “frozen workforce.”
Under normal circumstances, businesses grow by hiring, and employees move by changing roles. “Right now, both sides are hesitant,” Taylor said.
“Less job turnover means workers stay in jobs longer, even if they aren’t a good fit,” Taylor said in a note to USA TODAY. “Fewer new roles limit entry points for young or first-time workers. Less competition among employers reduces pressure to improve pay or benefits.”
Where is the job market headed?
After a year marred by economic uncertainty, changing trade policy and relatively high interest rates, ZipRecruiter economist Nicole Bachaud said businesses may be more willing to hire now that they have a little more clarity about tariffs, and because interest rates are expected to drop through the end of 2025.
The primary uncertainty today lies in the potential effects of an Iran war, he said.
“Depending on the length of conflicts and the level of U.S. involvement, there are usually some delayed effects on certain industries that may start to show up later,” Bachaud said. The biggest risk is if consumers pull back their spending on other goods and services to cover higher gas prices, which could dampen hiring expectations.
The Challenger, Gray & Christmas report of May 7 showed that private employers announced cuts of 83,387 jobs in April, up from 60,620 in March, but down 21% from April 2025. It found that they announced plans to hire 10,049 workers in April, down 38% from 16,191 in March. So far this year, hiring plans are down 13% compared to the first four months of 2025.
What does this mean for the Fed?
Some Fed officials have described the federal funds rate – which ranges from 3.5% to 3.75% – as nearly neutral. The average expectation of rate-setting committee members for rates released March 18 suggests a quarter-point cut will be made before the end of the year.
A stable unemployment rate coupled with positive job growth and rising inflation could change this. Forecasters have begun to anticipate the possibility of a rate hike later this year, but no movement is still expected at the Fed’s next meeting in mid-June.
If the Senate confirms President Donald Trump’s nominee Kevin Worsh, the June meeting will be his first as speaker. Despite Trump’s calls for lower rates, Wersh won’t be the only voice when it comes to the Fed’s key rate. Even if he believes low rates are the best path for monetary policy, he will still need to convince a majority of the rate-setting committee to vote with him.
This is a developing story and will be updated as new information is added.