US employers defy economic shock from Iran war, add a surprisingly strong 115,000 jobs

Manufacturers cut 2,000 jobs in April and 66,000 over the past year, despite US President Donald Trump’s tariff policies aimed at boosting factory employment.

“The labour market is not booming, but it is proving harder to break than many feared,” Olu Sonola, head of US economics at Fitch Ratings, said.

Gus Faucher, chief economist at PNC, said businesses viewed the Iran conflict as temporary and continued to spend and invest. He warned that longer disruptions and higher energy prices could slow economic growth.

The Labour Department also revised February and March payroll figures down by 16,000 jobs combined.

Workforce shrinks, inflation rises

Average hourly earnings rose 0.2 per cent from March and 3.6 per cent from a year ago. The labour force participation rate fell to 61.8 per cent, the lowest level since October 2021.

Economists linked the decline in workforce participation to baby boomer retirements and Trump’s immigration crackdown. Oxford Economics said the economy now needed very few new jobs each month to keep unemployment from rising.

After the US and Israel launched joint attacks on February 28, Iran shut down the Strait of Hormuz, a route that carries about one-fifth of global oil and liquefied natural gas supplies. Economists cut forecasts for US and global growth after the disruption pushed up energy prices.

Payroll processor ADP reported that private employers added 1.09 lakh jobs in April, the fastest pace since January 2025.

Fed likely to hold rates

The jobs report may reduce pressure on the Federal Reserve to cut interest rates. Inflation rose to 3.3% in March, above the Fed’s 2% target, after gas prices spiked during the Iran conflict.

Fed officials had earlier discussed rate cuts amid concerns over weak hiring. But job growth stabilised in recent months, weakening the case for lower rates.

Friday’s jobs report “actually makes it less likely that we see a rate cut anytime soon,” Faucher said. “The job market is solid. Let’s get inflation back down to 2%. This is not the time to cut rates.”