U.S. employers added 115,000 jobs in April, the Bureau of Labor Statistics estimated May 8, fueling some cautious optimism about hiring even as high oil prices tied to the Iran war and rising 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 hiring is trending stronger in 2026 than it was last year, when employers added only about 15,000 jobs per month on average. By comparison, U.S. employers added more than 150,000 jobs per month on average in 2024.
The unemployment rate remained at 4.3% in April. Officials and analysts see the unemployment rate as solid but say it does not tell the full story as immigration crackdowns and retirements from an aging workforce are limiting the supply of job seekers.
Still, positive job growth and a solid unemployment rate could prompt a Federal Reserve that has been concerned with slowing in the labor market to turn its attention back to inflation as an extended conflict in the Middle East pushes prices higher.
How Is the Job Market Overall?
After a year in which job growth stalled in the face of economic uncertainty, economists deemed the job market a “low-hire” and “low-fire” environment. Sam Taylor, a business expert at LLC.org, calls it the rise of the “frozen workforce.”
Under normal circumstances, businesses grow by hiring, and workers get ahead by switching roles. Right now, Taylor said, both sides are hesitating.
“Fewer job switches mean employees stay put for longer, even if they’re not the right fit,” Taylor said in a note to USA TODAY. “Fewer new roles limit entry points for younger or first-time workers. Less competition between employers reduces pressure to improve salaries or benefits.”
Where Is the Job Market Headed?
Following a year shaped by economic uncertainty, changing trade policy, and relatively high interest rates, ZipRecruiter Economist Nicole Bachaud said businesses may be more inclined to hire now that they have a bit more clarity around tariffs, and because interest rates came down at the end of 2025.
The primary uncertainty today lies in potential impacts of the Iran war, she said.
“There are usually some delayed effects on certain industries depending on the length and the level of U.S. involvement in conflicts that could start to show up later on,” Bachaud said, adding the largest risk is if consumers pull back their spending on other goods and services to cover higher gas prices, which could lead to decreased hiring expectations.
A May 7 Challenger, Gray & Christmas report revealed private employers announced 83,387 job cuts in April, up from 60,620 in March, but down 21% from April 2025. It found 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 characterized the federal funds rate — which stands at a range of 3.5% to 3.75% — as near neutral. Members of the rate-setting committee’s median expectation for the rate released March 18 implied one quarter-point cut will come before the end of the year.
Positive job growth and a stable unemployment rate paired with rising inflation could change that. Forecasters have begun pricing in a rate hike as a possibility later this year but still expect no movement at the Fed’s next meeting in mid-June.
If the Senate confirms President Donald Trump’s nominee Kevin Warsh, the June meeting will mark his first as chair. Despite Trump’s demands for lower rates, Warsh wouldn’t be the only voice when it comes to the Fed’s key rate. Even if he believes lower rates are the best path for monetary policy, he would need to persuade a majority of the rate-setting committee to vote with him.
This is a developing story and will be updated to add new information.
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