U.S. job growth slowed in April, but not nearly as much as was feared as the recreational boating industry and others brace for the eventual impact of President Donald Trump’s tariff campaign.

The Labor Department said Friday that the economy added 177,000 jobs, 8,000 less than a downwardly revised 185,000 in March. April’s figure was nonetheless 42,000 above economists’ consensus estimate of 135,000, and the jobless rate held steady at 4.2%.

“We were a little bit pleasantly surprised by just how positive the headline numbers were: solid job gains and a stable unemployment rate,” Ian Wyatt, director of economics at recreational marine lender Huntington Commercial Bank, told Trade Only Today. “The reality is that we have been through many shocks over the last few years, and aside from Covid, the economy has managed to weather these storms and keep growing.”

Chad Lyon, managing director, global inventory finance, at Wells Fargo, called the jobs report encouraging and told Trade Only Today that it showed “underlying strength in the U.S. economy.”

“There was uncertainty ahead of these numbers during the month,” Lyon added. “Consumer confidence numbers softened, and first-time jobless claims increased over recent trends. However, [Friday’s] report shows an economy that should be supportive for recreational boat sales.”

Health care remained the top job-creating sector of the economy, adding 51,000 jobs in April; transportation and warehousing added a surprising 29,000, much above its gain of 3,000 in March; financial activities added 14,000; and social assistance added 8,000.

Employment showed little change in other major industries. Federal government employment declined by 9,000, and is down by 26,000 since January, primarily because of the job-cutting efforts of Elon Musk’s extra-governmental Department of Government Efficiency.

“Breaking down the jobs numbers by industry, it is notable how narrow the gains were,” Wyatt said. “Almost all of the 177,000 jobs gained were in private services — health care, transportation, leisure and hospitality, and private educational services were the main segments adding jobs. Manufacturing employment was flat. Overall government employment was up 10,000, while the federal government shed 9,000 jobs. Construction jobs increased very modestly. It is also worth noting that February and March job numbers were revised down by 58,000.  We have averaged monthly gains of 155,000 jobs over the past three months — in line with the rate of growth we experienced in 2024.”

The Labor Department said the labor force participation rate — the measure of the population that is in the workforce — edged up to 62.6% in April, advancing for the second month in a row after slipping to 62.4% in February, the lowest that the rate had been in two years.

The government also said workers’ hourly pay rose by six cents, or 0.2%, to $36.06. During the past 12 months earnings have increased by 3.8 percent, which was equal to the 12-month figure from March and continued to reflect a pay gain that stays well above the current rate of inflation.

That level of increases has supported growth in consumer spending for a considerable period. As expectations rose that tariffs were imminent, spending sharply increased in March. People bought cars, trucks and SUVs to get ahead of the price increases and vehicle shortages that tariffs could cause.

The Commerce Department said spending rose 0.7% after an upwardly revised 0.5% increase in February, a gain that economists also attributed to efforts to beat tariffs. Consumer activity can represent as much as 70% of the economy.

“Wealthy consumers are still sitting on very healthy balance sheets and have not pulled back in their daily credit card spending,” Wyatt said. “The stock market, while volatile, has recovered some of the losses [in April] and is still up compared to two years ago.”

“For larger purchases like boats, fears of future inflation may be accelerating purchases,” he added. “We saw a real pickup in auto sales in March, and that continued through April as consumers looked to front-run expected price increases. The big question in auto sales is how much did these purchases increase the overall sales level for the year, or was it more pulling forward purchases from later in the year?”

Consumer confidence in the economy and the job market plunged in April in both major national surveys, and the decline was broad-based across age and income groups and among Americans who identify as Democrats, Republicans and independents, sparking fears that the economy could eventually lapse into a recession.

“Consumer sentiment is a soft economic data point that is driven by lots of factors but can be helpful when looking at the bigger picture,” Lyon said.  “We remain focused on hard economic data as we look ahead.”

Wyatt said his bank has noted the decline in consumer sentiment and that manufacturer surveys showed a large drop in new orders and sentiment.

“The drop in consumer sentiment from January cuts across political parties. There are two ways this could lead to a recession. The first and most important channel is consumer spending, and so far, despite lower confidence, consumers are still spending. We saw a little softness in daily card spending over the last couple of months, but that has been offset by strong spending on autos.”

“Consumer spending is the largest category of GDP, and it is holding steady and in fact increasing year over year,” Wyatt added. “The other channel where lower confidence and lower orders could slow the economy is business investment. Recent data shows manufacturing investments may have peaked. We expect weaker business investments in response to both heightened policy uncertainty and softer new orders.

“Manufacturers we talk to are very frustrated by the on-again, off-again nature of the tariffs. It makes it very difficult to plan production,” Wyatt added. “Though uncertainty is common in manufacturing, the current levels of policy uncertainty on a range of topics, not just tariffs, are causing companies to hesitate, slow hiring and look to conserve cash. A slowdown in business investment would temper growth. It likely would not be large enough in magnitude to push the economy into recession.”

The Federal Reserve’s policy-making committee will meet on Tuesday and Wednesday, and Wyatt said he expects the central bank to make no change in its benchmark interest rate.

“Until the jobs picture weakens substantially (opposite of Friday’s report), we expect the Fed will hold rates at current levels,” Wyatt said. “Core PCE inflation is the Fed’s primary target, and it is still up 2.6 percent, which is well above their 2 percent target. In addition, many companies are telling us and the Fed that they will be passing along a large part of the price increases from tariffs, so the Fed is nervous about the outlook for inflation.

“Beyond goods inflation, services inflation will likely remain an issue, as wages are still rising,” Wyatt added. “This report showed average hourly earnings up 3.8 percent year over year and 0.2 percent month over month. Healthy wage growth is key to rising consumer spending. As long as the economy keeps adding jobs, the Fed has room to hold rates steady and would be justified in doing so, given the concerns about current and future inflation.”

Said Lyon, “We have seen bond yields fall, which can be an indicator the market is expecting rates to come down in the near term. However, the data remains healthy, so the timing of any cuts are difficult to call.” 

Ahead of Friday’s jobs report the Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey that vacancies nationally fell by 288,000, to 7.19 million in March from a downwardly revised 7.48 million the previous month.

It was yet another indicator of weaker demand for labor. Vacancies were at their lowest since last September. The number of vacancies per unemployed worker fell to 1.0, also the lowest since September.

Hirings rose by just 41,000, to 5.4 million. Layoffs fell by 222,000, to 1.56 million, which was the lowest since last June.

The ADP Research Institute said last Wednesday in its National Employment Report for April that private sector employment rose by just 62,000, down from 155,000 the month before. The gain was the smallest since July of 2024.

Annual pay was up by 4.5% on a year-over-year basis for people who stayed in their current jobs, down 0.1% from March. Among job changers, the gain was 6.9%, up 0.2% from March.

“Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,” Nela Richardson, the ADP’s chief economist, said in a statement. “It can be difficult to make hiring decisions in such an environment.”

The institute said hiring at medium-size businesses (50 to 499 workers) led April’s slim growth, with 40,000 newly employed. The overall gain in employment was greatest in the Midwest, where 42,000 people were hired.