US non-farm payrolls April 2025 preview: signs of labour market weakness?

Economic

Summary:

April’s US jobs report is expected to show slower hiring and stable unemployment, signaling a cooling labor market. Weak data could spur Fed rate cuts, impacting stocks, bonds, the dollar, and gold.

What to expect from April's non-farm payrolls report

The April US non-farm payrolls (NFPs) report, set for release on Friday 3 May, is expected to confirm a cooling trend in America's labour market. Consensus estimates project job creation of 135,000-145,000 positions, a significant drop from March's 175,000 figure.

Economists anticipate the unemployment rate will hold steady at 4.2%, maintaining the gradual upward drift from pandemic-era lows. This slow deterioration reflects growing caution among employers as broader economic conditions show signs of weakening across multiple sectors.

Average hourly earnings, a key inflation barometer closely monitored by the Federal Reserve (Fed), are forecast to increase 0.3% month-on-month (MoM). This would keep annual wage growth around 4.0%, a level that remains somewhat elevated but has moderated from the hotter readings seen during 2022-2023.

The April report carries particular significance following the surprise 0.3% gross domestic product (GDP) contraction in Q1 2025 and Wednesday's disappointing ADP private payrolls figure, which showed a meagre 62,000 jobs added by the private sector. These developments have heightened concerns about economic momentum and raised questions about the sustainability of labour market strength.

Recent economic indicators point to broader slowdown

A series of economic releases in recent weeks has painted an increasingly concerning picture of US economic health. The unexpected 0.3% contraction in first quarter (Q1) GDP caught many analysts off guard, marking the first negative reading since the brief pandemic-induced recession of 2020.

The ADP private employment report severely undershot expectations with just 62,000 jobs added in April, far below the consensus forecast of approximately 160,000. This represents the weakest private sector job creation since January 2021, when Covid-19 restrictions were still hampering economic activity.

Manufacturing data has shown persistent weakness, with the ISM Manufacturing purchasing managers index (PMI) remaining in contractionary territory below 50 for the seventeenth consecutive month in April. The services sector, while still expanding, has shown signs of moderating growth in recent readings.

Weekly jobless claims have been trending higher, with initial claims consistently above 240,000 in recent weeks – well above the 200,000-215,000 range that characterised much of 2023. While not yet at levels typically associated with recession, this steady increase suggests growing stress in the labour market.

Implications for Federal Reserve policy

The employment situation has become increasingly central to the Fed's policy deliberations as inflation has shown tentative signs of moderating. With price pressures easing but not yet at target levels, the focus has shifted toward supporting the labour market.

Markets are currently pricing in approximately a 65% probability of a rate cut at the June Federal Open Market Committee (FOMC) meeting, with expectations for 75-100 basis points of easing by year-end. A significantly weaker-than-expected jobs report could cement these expectations or even pull them forward.

Fed Chair Jerome Powell's recent communications have acknowledged growing concerns about employment conditions, suggesting a subtle shift in the committee's risk assessment. The Fed appears increasingly willing to tolerate some inflation overshoot to avoid unnecessary damage to the labour market.

Any signs of accelerating wage growth in Friday's report would complicate this narrative, potentially forcing the Fed to delay interest rate cuts. However, most analysts expect wage pressures to continue moderating, giving the central bank increased flexibility to pivot toward easing.

Key components to watch beyond headline numbers

While the headline jobs figure captures most attention, several other components of the report will provide crucial insights into labour market health. The labour force participation rate, currently at 62.5%, will be closely monitored for signs of workers entering or exiting the job market.

Revisions to previous months' data could prove equally important as the April figures themselves. Significant downward adjustments to February and March would suggest the employment situation has been deteriorating more rapidly than initially understood.

The sectoral breakdown will reveal which parts of the economy are holding up and which are struggling. Manufacturing employment, which has shed positions in several recent reports, will be scrutinised for further weakness, while the performance of leisure and hospitality sectors could indicate consumer spending health.

The U-6 unemployment rate, a broader measure that includes discouraged workers and part-time employees seeking full-time positions, provides a more comprehensive view of labour market slack. Currently at 7.8%, any significant increase would signal deepening problems beneath the headline figures.

Market reaction scenarios to consider

A weaker-than-expected jobs report would likely trigger a rally in bond markets, pushing yields lower as investors price in earlier and potentially more aggressive Fed rate cuts. The US dollar would probably weaken against major currencies in such a scenario.

Equity markets might initially react negatively to signs of economic weakness, but could quickly reverse if the data is seen as accelerating the path to monetary easing. Growth stocks and tech names might outperform cyclicals in this environment as lower discount rates boost valuations.

Conversely, a surprisingly strong report could lead to a bond sell-off and higher yields, as markets reassess the timing of potential rate cuts. The dollar would likely strengthen, while equity markets might experience a mixed reaction with economically sensitive sectors potentially outperforming.

Gold trading could see significant volatility following the release, as the precious metal responds to shifts in both real yields and economic uncertainty. A weak report might boost gold on expectations of imminent rate cuts, while a strong report could pressure prices by pushing back easing expectations.

Historical context and labour market trends

The current employment situation represents a normalisation from the extremely tight labour market seen during the post-pandemic recovery. During 2021-2023, monthly job gains frequently exceeded 300,000, a pace that was clearly unsustainable as the economic cycle matured.

The gradual increase in unemployment from 3.5% in early 2023 to the current 4.2% reflects a controlled cooling rather than a sharp deterioration. Historically, recessions have been characterised by more rapid increases in unemployment – the absence of such a spike has kept recession calls somewhat at bay.

Job creation in the 100,000-150,000 range is broadly consistent with population growth and workforce expansion. However, sustained readings below 100,000, particularly if accompanied by rising unemployment, would signal more serious economic distress and could trigger recession concerns.

Wage growth has shown remarkable persistence despite the Fed's aggressive tightening cycle. Annual growth around 4% remains above levels compatible with the Fed's 2% inflation target, suggesting some structural shifts in the labour market may be keeping wage pressures elevated even as overall conditions cool.

How to trade the non-farm payrolls report

The monthly jobs report typically generates significant market volatility, creating trading opportunities across multiple asset classes. Understanding potential market reactions can help you position appropriately ahead of this key data release.

Risk management becomes particularly important during high-impact economic releases. Consider using stop losses to protect against adverse price movements, and determine your position sizes based on the heightened volatility typically seen around payrolls data.

Focus on assets most sensitive to US economic data, including major US indices, dollar-denominated forex pairs, and Treasury yields through bond markets. These typically exhibit the strongest reactions to employment figures.

Spread betting and CFD trading offer ways to speculate on short-term price movements following the report, while longer-term investors might consider how the data affects the broader economic outlook for their investment portfolios.

Source: ig

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Owen Li

Economic

Stocks

The US Bureau of Labor Statistics (BLS) is set to release employment data for the month of April tomorrow morning, Friday, May 2.

breaking news here. We're getting manufacturing data. We also have your ISM and S&P manufacturing data for April coming in line with estimates just above the key 50 level, which separates growth from contraction. The ISM numbers showing economic activity in the manufacturing sector contracting in April for the second month in a row. The reading comes after GDP data on Wednesday showed the US economy contracted in the first quarter for the first time in three years. Joining me now, Paul Gruenwald, S&P Global Ratings Global Chief Economist, Paul, great to speak with you. I do want to start on this April manufacturing data here because some interesting things under the hood. Production falling to the lowest level since May of 2020. Prices paid, highest reading since June of 2022. What does that tell you about manufacturing?

Um, well, it tells me that this process that started with the um the uh policy uncertainty and then moved to the markets is now starting to show up in the real data. That's kind of the last leg of this transmission. We had a decent first quarter. Maybe we can talk about that uh in a minute, but uh we've been waiting for this to sift into the real economy. The PMIs uh weak for manufacturing are just signaling that there's probably some weakness on the real side ahead.

And talk to me too about the employment number here rising. There was a little bit of concern this morning when jobless claims came in just a touch higher than anticipated. Is this a sign that the employment situation is intact?

That's the critical variable, right? If you go back a couple of years to the inflation scare and the big rise in rates, we've been really focused on this resilience between consumer spending and the labor market. That's held up so far, but if you want to differentiate between the slowdown scenario and the recession scenario, it's going to center on the labor market. So if we start to see cracks in the labor market, that's going to take us into the recession scenario. Not there yet, but we're starting to see a little bit of weakness.

I like to uh I like to look at these PMI numbers like uh like business sentiment, just like consumer sentiment's very important for that part of the market. Yeah. So, um, you know, the sentiment seems to be pulling down, not surprisingly. The question is, is, you know, how how quickly are we going to really start to see this stuff show up uh in the so-called hard numbers. Although I look at these as hard numbers, but many would call them soft numbers, but for me, firms are uh are are they do the they do the right thing and they they don't have emotions involved. So when I see sentiment starting to drop, I start to get worried. I'm concerned.

Yeah. I think we're with you on that. I mean, it's not kind of a straight line and uh you're right, these are soft data because we're not measuring stuff, but certainly if you're looking at, you know, future orders or this is going to feed into CAPEX or something like that. It's definitely going to uh move the needle. We know that some of the shipments from China have slowed down dramatically. That's going to take a couple of weeks to work through the system. We know that the financial system's gummed up a bit on M&A and some of the, you know, spec grade issuance. So all that's going to take a little bit of time to feed through, but directionally it's very clear where we're going. It's just question of how steep the descent's going to be for the rest of year.

Let's talk about what you just mentioned with regards to China. Obviously, one of our top three importers, we had about a 3% pull forward in terms of demand in the GDP data. Yeah. When do you anticipate that we might start to see empty shelves because of that pressure?

Yeah, well, there's some stories floating around on timelines. The ships take a while to get from China to here, but uh you know, the timeline seems to be sometime in the next couple of months. Uh the ships will stop, then the ports will be empty, and then the shelves will be empty, and then we're going to see uh some of that pressure. The tariff rates on US and China from both sides are now triple digit, right? This is totally uncharted uh territory. The Chinese basically stopped the uh escalation. They said this isn't really meaningful anymore. So we're going to have to find an exit ramp to that or else that's going to feed through the economy and you know, put a big dent in our macro story.

So on the empty shelves piece. Yes. When might we see it and what does that cause in the economy?

Yeah, we're not we're not kind of forecasting that particular one. The stuff that I read that I agree with is probably sometime end of the second quarter. So it's going to be, you know, we're in May right now, so maybe the next couple of months.

And where does that leave your outlook on the economy too?

Well, that's kind of factored in already. Let's remember US is a services economy, so it's 70% services, but certainly we're going to see some stress on the shipment. We're going to see some stress uh on consumer sentiment and uh yeah, we're going to have some soft spots before we uh maybe pull out of this next year, but we got a big descent in growth over the next couple of quarters.

You know, not surprisingly, you know, the numbers that we got the other day, the GDP numbers showed a lot of this front loading that we've been talking about, all these companies making purchases prior to uh the tariffs hitting. Um you know, I'm slightly concerned that, you know, all this front loading while it sort of helped last time, it's going to hurt us in the future, right? So uh purchases made today are not going to be made next quarter. Now, obviously, there are some intricacies there with inventories and things like that. Uh but are you feeling that that there might be some interesting negative surprises there too? I mean, consumers as well. Yeah. front loaded, but it didn't show up in the numbers, but

Yeah, well there was a funny print, right? Because the we had this massive negative uh contribution from imports and we didn't really get the full offset on stocking. So like there might be a missing hole, but um you're right, the consumer bit, which is what we watch, decelerated a bit in the first quarter. We're going to continue to see that uh throughout the year. We're thinking maybe you average the first two quarters together and maybe some of these one-off things are going to unwind, but the trend is pretty clear. But what we saw in the first quarter was maybe a slightly artificially low number for the US. And we also saw slightly artificially high number for China because they had the opposite thing where they're export boom. So all this messy stuff around the tariffs is going to take a couple of quarters to uh sift through. So we shouldn't be focusing too much on one particular data print and kind of looking at the whole the food chain there.

Well, it does seem like the bond market is hyperfocused on ISM at the moment. We're seeing treasuries pairing gains just a touch. To what extent do you think this market is aptly reacting to the stagflationary risks that are presented by so much of the economic data we're getting in right now?

Yeah, well, you've seen that a bit, right? And uh we know that prices are going to go up. We've got 4% inflation in the US at the end of this year. The question is, is that just a jump in the price level or is that really going to start lifting inflation continuously? Um longer-term inflation uh sort of uh sentiments crept up a bit, but uh you know, the bond market's trying to thread that needle, right? So the Fed's probably going to be cautious. We only have two cuts this year, the economy is slowing, less of stuff in the year. So I think the bond market looks like it's reflecting most of that.

And really quick, any thoughts before NFPs tomorrow?

Um, we're watching the one data point isn't uh isn't going to change our view, but again, we're expecting uh material slowdown in US growth this year and labor market's going to be part of that story.

Source: Kitco

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

Central Bank

Treasury Secretary Scott Bessent said Thursday that the bond market is signaling that the Federal Reserve should be cutting rates.

"We are seeing that two-year rates are now below fed funds rates, so that's a market signal that they think the Fed should be cutting,” Bessent said Thursday on Fox Business Network's "Mornings with Maria."

The fed funds rate is the benchmark interest rate set by the Federal Reserve, an overnight rate that influences rate levels on all bond maturities from three months to 10 years.

The Fed’s policy rate is currently set in a range of 4.25% to 4.5%. The yield on the two-year Treasury sits at 3.75% as of Thursday.

Traders don't expect the Fed to lower rates at its next meeting on May 6-7, but they are betting on a cut in June and more cuts later in the year.

The Treasury secretary’s new comment follows a number of suggestions from President Trump that the Fed and its chairman, Jerome Powell, should lower rates.

"I have a guy in the Fed, not a huge fan,” Trump said Wednesday. “We should have interest rates go down and be positive."

The president has offered plenty of new signs this week that he does not intend to let up on the central bank or its chairman a week after saying he has "no intention" of firing the central bank boss.

It was Trump himself who stoked speculation about Powell's fate after asserting on social media last month that "Powell's termination cannot come fast enough."

The assurance he wouldn’t try to remove Powell helped calm investors worried that Trump was ready to upend the Fed's leadership and directly challenge its independence.

But then this week Trump once again went after the Fed and Powell, saying at a rally in Michigan that "I have a Fed person who is not really doing a good job."

He didn’t mention Powell by name, with Trump saying, "I want to be very nice and respectful to the Fed."

"You are not supposed to criticize the Fed; you are supposed to let him do his own thing, but I know much more than he does about interest rates, believe me," he added.

Bessent said earlier in the year that he and the president were focused not on the Fed but on bringing down the yield on the 10-year Treasury, and he repeated that focus in his Thursday appearance on Fox.

“There's been a substantial decrease in the 10-year since the beginning of the year, but especially since Jan. 20,” he said. “And President Trump and I are targeting that point on the curve.”

The yield on the 10-year Treasury has been volatile over the past month as the administration announced the steepest tariffs in a century, only to pause them as businesses scrambled to import inventories they need from abroad and were unsure of what could happen next.

The yield has been mostly range-bound around 4% to 4.5%. The 10-year yield on Thursday was 4.15%.

Source: finance.yahoo

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

The S&P 500 could revisit its recent lows amid persistent policy uncertainty and tariff-related market stress, Wells Fargo’s top strategist warned.

The index had briefly declined 20% from its mid-February intraday record of 6,144 before staging a partial recovery. The S&P 500 is still down approximately 10% from its peak.

Scott Wren, senior global market strategist at Wells Fargo Investment Institute, says that the pullback is consistent with historical averages, but warns that volatility may not be over.

“We wouldn’t be surprised if the SPX retested its lows as additional uncertainties create headwinds,” Wren said in a Wednesday note. Concerns over trade policy and the global growth outlook continue to weigh on investor sentiment.

Wren expects the market to remain in a broad trading range between 5,000 and 5,500 in the near term.

“It seems a catalyst will be needed to push the market noticeably higher,” he said, pointing to the possibility of a completed trade deal with Europe or China. However, such a breakthrough is likely to take time, as geopolitical maneuvering continues to cloud visibility.

“Meanwhile, U.S. and international leaders are posturing with moves and countermoves, which only leave investors with more questions,” Wren added.

The report also flagged U.S. fiscal policy debates as another potential source of turbulence. Legislative efforts to extend the Trump-era tax cuts and raise the debt ceiling are underway, but face hurdles due to narrow Republican majorities and broader political friction.

This, Wren cautions, could add to market volatility, especially as key budget deadlines approach in May.

Amid these uncertainties, the strategist is advocating for quality across portfolios. He recommends U.S. large- and mid-cap equities and favors sectors with strong balance sheets and cash flow generation, such as Information Technology, Communication Services, Financials, and Energy.

“Our view is that quality allocations should help preserve wealth and offer better growth opportunities as uncertainties finally fade,” Wren concluded.

Source: investing

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Political

U.S. President Donald Trump's national security adviser Mike Waltz is being forced out of his job, four people briefed on the matter said on Thursday, in the first major shakeup of Trump's inner circle since he took office in January.

Waltz's deputy, Alex Wong, an Asia expert who was a State Department official focused on North Korea during Trump's first term, is also leaving his post, two people told Reuters.

Waltz, a 51-year-old former Republican lawmaker from Florida, faced criticism inside the White House when he was caught up in a March scandal involving a Signal chat among top Trump national security aides.

The national security adviser is a powerful role that does not require Senate confirmation. It was not immediately clear who would take over from Waltz. The National Security Council did not immediately reply to a request for comment.

Sources said the options included U.S. special envoy Steve Witkoff, who has been involved in Russia-Ukraine diplomacy as well as the Middle East, and Deputy Secretary of State Christopher Landau.

Secretary of State Marco Rubio could assume the position on a temporary basis while a permanent selection is settled upon, sources said.

The Waltz ouster caps a month of personnel turmoil within Trump's national security establishment. Since April 1, at least 20 NSC staffers have been fired, the director of the National Security Agency has been dismissed and three high-ranking Pentagon political appointees have been shown the door.

The purges have seriously hurt morale in some areas of the national security establishment, according to several officials within or close to the administration. Some elements of the government are low on relevant national security expertise and in some cases it has proven difficult to attract high-level talent, the officials added.

The NSC is the main body used by presidents to coordinate security strategy, and its staff often make key decisions regarding America's approach to the world's most volatile conflicts.

Waltz was blamed for accidentally adding the editor of The Atlantic magazine to a private thread describing details of an imminent U.S. bombing campaign in Yemen. The Atlantic reported on the mishap.

At a subsequent Cabinet meeting with Waltz in the room, Trump expressed his preference for holding such conversations in a secure setting, a clear sign of his displeasure. But he and others in the White House publicly expressed confidence in Waltz at the time. Waltz also attended Trump's televised Cabinet meeting on Wednesday.

WAVE OF FIRINGS

The NSC that Waltz will leave behind has been thinned by dismissals in recent weeks.

The bloodletting began a month ago, when Laura Loomer, a right-wing conspiracy theorist, handed Trump a list of individuals in the NSC she deemed to be disloyal during a meeting at the White House. Following that meeting, four senior directors were released.

Those four senior directors - who oversaw intelligence, technology, international organizations and legislative affairs, respectively - had a long history in conservative policymaking and no apparent animosity toward Trump, leaving colleagues puzzled by their dismissals, according to two people with direct knowledge of the matter.

Some NSC staffers were upset that Waltz did not more forcefully defend his staff, those people said.

Since then, more than 20 additional NSC staffers of various profiles have been let go, typically with no notice, the people said.

In recent weeks, multiple officials have declined positions at the NSC amid the ongoing personnel upheaval, according to two sources with direct knowledge of the matter. Some areas of the council are now lightly staffed, with both the Latin America and Africa sections lacking permanent senior directors as of last week.

The Signal controversy was not the only mark against Waltz in Trump's eyes, sources said.

A person familiar with the Cabinet's internal dynamics said Waltz was too hawkish for the war-averse Trump and was seen as not effectively coordinating foreign policy among a variety of agencies, a key role for the national security adviser.

Another source said Trump wanted to get to the 100-day mark in his term before firing a cabinet-level official.

Waltz's ouster could be of concern to U.S. partners in Europe and Asia who have seen him as supportive of traditional alliances such as NATO and tempering more antagonistic views toward them from some other Trump aides, according to one foreign diplomat in Washington who spoke on condition of anonymity.

Democrats who were outraged about the Signal scandal welcomed the news about Waltz.

"About time," said Democratic Senator Adam Schiff.

Source: Reuters

Risk Warnings and Disclaimers

Add to Favorites

Diana Wallace

Stocks

Shares of Meta Platforms (META 4.65%) are rising on Thursday. The company's stock gained 4.9% as of 12:46 p.m. ET, and gained as much as 8% earlier in the day. The leg up comes as the S&P 500 gained 0.9% and the Nasdaq Composite gained 1.9%.

The social media behemoth released its Q1 report after market close yesterday, beating Wall Street's already-high expectations.

Another strong quarter

The Facebook parent posted Q1 2025 earnings per share (EPS) of $6.43 on $42.3 billion in sales -- that's 35% EPS growth year over year (YOY) and 16% sales growth YOY. The figures came in well over Wall Street's targets. Meta's forecast revenue range of $42.5 billion to $45.5 billion for Q2 also beat expectations.

CEO Mark Zuckerberg emphasized the company's strong position despite macroeconomic uncertainty, particularly citing resilience in its advertising business and growth in AI. "We're making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives," he said.

An AI spending spree

Meta significantly raised its capital expenditure forecast for 2025 to between $64 billion and $72 billion, a substantial increase from previous estimates. The spending growth is driven by the company's commitment to accelerate its AI programs and the infrastructure that enables them. Meta's ability to drive advertising revenue and efficiency with AI makes the technology extremely valuable to growth overall.

Meta is well-positioned

Meta continues to grow its active user base across its family of social media platforms, up 6% YOY. This, combined with the company's AI-driven efficiency, is leading to its incredible earnings growth. Its stock also remains one of the most reasonably priced among its mega-tech peers. I think Meta is a great pick.

Source: The Motley Fool

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

The Australian dollar is in negative territory on Thursday. In the North American session, AUD/USD is trading at 0.6382, down 0.30% on the day.

Retail sales expected to improve

Australia's retail sales for March are projected to improve to 0.4% m/m, following a 0.2% increase in February. The retail sales report will provide a snapshot as to how well Australian consumers are coping with the turbulence from US President Trump's tariff policy. Consumers are being squeezed by the high cost of living and elevated interest rates.

Australians go to the polls on Saturday. The government jumped on the drop in first-quarter core CPI, which dropped to 2.9%, below the 3% upper band of the RBA's target band and supports the case for a rate cut. Australia's finance minister said that the RBA is expected to lower rates four or five times this year, which would save householders hundreds of dollars on mortgage payments.

US GDP, Core PCE Price Index decelerate

In the US, first-quarter GDP was a disappointment. The economy contracted by 0.3%, following a strong gain of 2.4% in the fourth quarter and missing the market estimate of 0.3%.

On the inflation front, the Core PCE Price index, the Fed's preferred inflation indicator, came in flat, down from a revised 0.5% in the previous release. This was the first time since Oct. 2020 that core PCE inflation has failed to post a gain. Annualized, the index fell to 2.3% from a revised 2.7%.

Next up is nonfarm payrolls on Friday, with the markets bracing for a sharp drop to 130 thousand, after a gain of 228 thousand a month earlier. With the markets on edge, a surprise reading could have a strong impact on the movement of the US dollar on Friday.