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April 28, 2025

Payroll employment is poised to show a drop in April to 120,000 from 228,000 in March. Private sector payrolls are expected to rise by 130,000, while public sector payrolls are expected to shed 10,000 jobs. A drop in federal employment is expected to more than offset a slight increase in local government hiring. Workers with buyouts and those on administrative leave are not counted as unemployed; that will have blunted the initial blow to federal employment.

Employment gains are expected to remain concentrated in healthcare and social assistance. We should see an increase in leisure and hospitality, although the Federal Reserve’s Beige Book suggests that travel and tourism are slowing.

Retail is expected to remain tepid as retailers brace for the effects of tariffs, specifically the pressure on margins and prices. The outlier could be vehicle dealers as those who could rushed to buy ahead of tariffs. The bulk of those gains occurred in late March and the first half of April. Foot traffic on dealer lots slowed over the course of this month.

Goods production is expected to be mixed. Construction could add jobs as well. Builders are rushing to finish before tariffs and curbs to immigration push up costs; some projects in the planning stage have been temporarily shelved. Manufacturing is poised to weaken after posting only modest gains last month.

Transportation and warehousing likely shed jobs after picking up earlier in the year. Trade with China hit a wall with the imposition of prohibitively high tariffs, which is taking a toll on shipping and related jobs.

Average hourly earnings are expected to rise 0.2% in April, slightly less than we saw in March. That translates to a 3.8% increase from a year ago, the same as March. Average weekly hours are expected to hold at 34.2 hours.

Separately, the unemployment rate is expected to hold steady at 4.2% although much depends on participation in the labor market. We have seen the participation rate among prime-age workers (25-54 years old) erode in recent months.

Men and women with a child under the age of five and a bachelor's degree or more showed the largest losses in recent months. Childcare problems are the number one reason those workers are dropping out of the labor market. More parents of young children are also opting to work part- instead of full-time to deal with childcare problems. Childcare disruptions in the data do not include missed work when a child is ill.