The US economy added 115,000 jobs in April, well above expectations for 65,000, while the unemployment rate held steady at 4.3%. Private payrolls rose 123,000, average hourly earnings increased 0.2% month over month and 3.6% year over year, and average weekly hours edged higher to 34.3. Manufacturing payrolls declined by 2,000 jobs, government employment fell by 8,000, and the labor force participation rate slipped to 61.8%.
At a headline level, this was a stronger report than many expected. The payroll gain came in above nearly every economist's forecast, and wage growth continues to outpace inflation. Average hourly earnings are now rising faster than headline CPI, meaning many workers are still seeing real wage gains even as higher energy costs tied to the Iran conflict continue pressuring household budgets.
The broader labor market also increasingly appears to be stabilizing after the near-flat hiring environment that dominated much of last year. Importantly, the context around payroll growth has changed. Federal Reserve Chair Jerome Powell noted earlier this year that slower labor-force growth means the economy likely requires fewer monthly job gains to maintain stable unemployment than it did previously. Some economists now estimate the “breakeven” pace of payroll growth may be closer to 50,000 jobs per month.
But underneath the headline, the labor market still looks uneven. Manufacturing employment declined again. The broader U6 unemployment rate rose to 8.2%. Participation edged lower, and the number of people working part-time for economic reasons increased sharply in April.
That helps explain why many consumers still feel cautious even while the headline labor market data remains relatively stable. Someone working in healthcare, transportation, warehousing, retail trade, or areas tied to AI infrastructure investment may still experience a relatively healthy labor market.
Someone working in manufacturing, recruiting, media, technology, or other white collar industries may experience something very different, where hiring feels slower and replacing a lost job appears harder than it did several years ago.
Both realities can exist simultaneously. This increasingly reflects what we have been describing as an E-shaped economy, where aggregate data remains stable while confidence underneath becomes far more fragmented across industries, income levels, and skill sets.
The revisions also reinforce the idea that momentum remains softer than the headline alone suggests. While March payrolls were revised slightly higher, the cumulative two-month revision still reduced prior job growth by 16,000 positions.
The labor market is no longer deteriorating. That matters.
Payrolls are still rising, and unemployment is held at 4.3%. But the 3-month payroll average is just 48,000.
And the labor force declined again. Involuntary part-time work also jumped by 445,000. Weakness is showing up in hours and real wages before unemployment.
For housing, “not getting worse” helps. But it is not a tailwind.
According to the latest Zillow market report, April sales are barely matching year-ago levels, even with mortgage rates roughly 40 bps lower.
Housing costs eased. Everything else got more expensive.
More:
1/ We saw a second consecutive robust increase in nonfarm payroll employment during April (+115K). These are the numbers that are most sensitive to revisions, so grain of salt and all that, but gains of this scale, if they continue, will drive down unemployment.
2/ In April, the unemployment rate ticked up a little, from 4.26% to 4.33%. (The portion of the report that comes from the household survey was generally soft and unimpressive in April.) But let's step back: I thought the unemployment rate would be a little higher at this point when we started the year; through 4 months of 2026, we're seeing a slight warming in the job market.
3/ The job market for prime working-age Americans remains extremely resilient: the share of them with a job was 80.7%, barely changed from March. People who have a job are relatively insulated from weak hiring because layoffs are low.
4/ The unemployment rate for 20-24 year olds was higher in April (7.6%) than in March (6.4%), but is lower than it was a year ago. I think we should spend a little less time worrying about people in their early 20s and reallocate those extra worries to people in their late teens! The unemployment rate for 18-19 year olds was 13.4% in April, vs. 12.1% a year earlier and 11.5% 2 years earlier.
5/ We saw small increases in cyclical part-time work ("for economic reasons") and people who want a job but aren't actively looking ("marginally attached"). Both of these are slightly worse than they were a year ago, just like the unemployment rate.
6/ The strongest industry gains: health care & social assistance (+54K), transportation & warehousing (+30K), retail (+22K)
7/ The ugliest industry declines: information services (-13K), financial activities (-11K), government (-8K)
1. Upside Surprise: Monthly job creation once again beat expectations. At 115,000, the April print was nearly double the consensus forecast.
2. Steady Unemployment: The unemployment rate held at 4.3%, as the consensus anticipated.
3. Moderate Wage Growth: At 0.2%, monthly growth in average earnings was slightly below the 0.3% consensus—a signal that counters fears of a tight labor market fueling a wage-price spiral.
4. Participation Friction: Instead of edging up toward 62.0%, the labor force participation rate came in at 61.8%.
5. Wash-out Revisions: While March’s blockbuster figure was revised higher, it was offset by a downward revision to February, leaving a net change of -16,000.
In sum, this data release confirms a resilient labor market despite recent headwinds from the Middle East War.
The demand side remains robust, while the supply side continues to navigate the dual issues of retirements and fewer immigrants.
And also drawing on other data from this week, what is "good news" for the financial markets and the Federal Reserve (muted earnings) risks amplifying concerns regarding the future economic, social, and political implications of labor's declining share of GDP.
At the same time, the civilian labor force has contracted notably so far this year, declining from 171.50 million in December 2025 to just under 170.00 million in April. The labor force participation rate also edged down, slipping from 61.9% in March to 61.8% in April, the lowest level since October 2021. This suggests that a meaningful share of potential workers has moved to the sidelines, posing an ongoing challenge for employers. Even as overall labor market conditions show signs of cooling, many businesses, including restaurants, will continue to struggle to find and retain talent.
The unemployment rate remained at 4.3% for the second straight month, which has been the average since June 2025. Yet, the number of unemployed individuals was somewhat higher, up from 7.24 million in March to 7.37 million in April.
As can be seen above, these data provide mixed comfort, with signs of both resilience and softening in the labor market. Steady employment and wage growth have been essential drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Restaurant operators are closely monitoring these labor trends as they work to drive traffic and sales against a backdrop of softer demand. While there are positive indicators that could support solid performance for the sector this year, risks remain, including a cooling labor market, higher energy costs, and heightened geopolitical uncertainties, among other factors.
At the same time, average hourly earnings for private‑sector production and nonsupervisory workers rose 0.3% to $32.23 in April, up 3.7% from a year earlier. This suggests a still-solid rate of wage growth in the U.S. economy, even as labor cost pressures have eased markedly from their peaks of 7.8% in April 2020, in the immediate aftermath of the pandemic, and 7.0% in January and March 2022.
Job growth in April was largely positive but mixed. The increase in employment was led by growth in trade, transportation, and utilities (including retail trade), private education and health services, and leisure and hospitality (including restaurants), among others. At the same time, there were notable declines for information, financial activities, the federal government, and manufacturing.
How to Make Sense of This Strange Job Market
Unemployment rate
Weekly jobless claims
280 thousand
4.5
%
260
4.4
240
4.3
220
4.2
200
4.1
180
4.0
2025
2026
2025
2026
Source: Labor Department
One reason it’s so hard to interpret what’s going on with the U.S. job market these days? It is doing some puzzling things.
Start with unemployment. On Friday, the Labor Department reported that the unemployment rate held steady in April at 4.3%. That is low historically, but notably above the multidecade low of 3.4% it hit three years earlier.
In the nearly 80 years the Labor Department has been keeping records, whenever the unemployment rate has made a clear turn higher, a recession has always followed. “We’ve never had a period before where the unemployment rate has sort of just slowly increased for three years,” said Harvard University economist Lawrence Katz.
Meanwhile, there have been some eye-catching layoffs from companies like Meta. According to outplacement firm Challenger, Gray & Christmas’s tally, announced job cuts in the tech sector ran 33% higher in the first four months of this year versus last year.
But overall, big, private-sector layoff announcements so far this year have been cooler than last year. More important, broader measures of firing activity, such as the monthly layoff figures the Labor Department gathers and the notices employers are required to file before doing large job cuts, have been running cool.
Then there are the weekly initial jobless claims figures. These typically turn sharply higher when the labor market deteriorates, providing an early indication that trouble is coming. They have remained remarkably low. On Thursday, the Labor Department reported a seasonally adjusted 200,000 new claims were filed for unemployment benefits in the week ended May 2. By comparison, claims averaged about 218,000 during the prepandemic year of 2019, when the job market was unambiguously strong.
The slow pace of firing has been paired with a low rate of hiring, however. Confusion about what is going on in the economy as a result of tariff actions and, more recently, the war in Iran, could be playing a part there. So could the evolution of artificial intelligence, which could be making employers uncertain about what the shape of their workforces will look like in the years ahead.
The result has been a job market without much movement. The sum of job separations (which includes people leaving their job for any reason) and hires as a share of overall employment is well below where it was before the pandemic hit.
The low rate of hiring and firing isn’t a problem if you are secure in a job you like. But for people entering the labor force, like new high-school and college graduates, it is daunting. Workers trying to find better jobs are probably also out of luck.
It’s a dynamic that could be feeding into dissatisfaction with the job market—and a sense that it is getting worse. The New York Fed reported Thursday that, on average, U.S. consumers it polled in April put a 44% chance on the unemployment rate going higher over the next year. That was just fractionally lower than April of last year, when tariff concerns were at the fore.
The slow pace of hiring might not just reflect a lack of demand from employers, however, but also a lack of supply. America’s population is aging and, with the youngest baby boomers turning 62 this year, more people are entering their retirement years. Layer on top of that sharp immigration restrictions, and the country isn’t adding a lot of potential workers. The Congressional Budget Office estimates that the population between the ages of 25 to 64 will actually edge lower this year, and will grow only slowly in the years ahead.
As a result, what counts as a “good” jobs report might need to be redefined. With less population growth, the economy can get by with fewer new jobs each month without unemployment rising.
One consequence of that: Months when the economy happens to lose jobs, such as February, could be an increasingly frequent occurrence that doesn’t necessarily signal the labor market is in trouble.
Nor should it be all that surprising if some sectors happen to shed jobs—especially considering that one sector is vacuuming up so many workers. Since the end of 2023, healthcare and social assistance have added nearly 1.8 million private-sector jobs. Outside of that, private-sector jobs have fallen by 127,800.
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Appeared in the May 9, 2026, print edition as 'How to Make Sense of This Labor Market'.