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

US employers added a surprising 150,000 jobs in April despite the Iran war choking oil supplies and driving up gasoline prices, while the unemployment rate stayed steady at 4.3 percent. That beat economists’ forecasts of just 65,000 new positions and showed a labor market proving far more resilient than many feared after the February 28 joint US-Israel strikes prompted Tehran to close the Strait of Hormuz.

Healthcare led with 37,000 new hires, transportation and warehousing added 30,000, retailers brought on 22,000, and construction gained 9,000. Manufacturing, however, shed another 2,000 jobs in April and 66,000 over the past year—undermining President Trump’s tariff push to revive factory floors. The numbers reveal an economy where service sectors and tech-related investment continue to carry the load even as energy costs climb.

Economists pointed to sustained consumer spending and business investment, particularly in technology and AI, as the quiet stabilizers. Olu Sonola of Fitch Ratings captured the mood: “The labour market is not booming, but it is proving harder to break than many feared.” Gus Faucher at PNC noted businesses treated the Iran conflict as temporary and kept spending, though he warned that prolonged disruptions could yet dent growth.

Yet the report carries warning signs beneath the headline strength. Average hourly earnings rose a modest 0.2 percent in April and 3.6 percent year-over-year, while the labor force participation rate dropped to 61.8 percent—its lowest since October 2021. Economists tied the decline to baby boomer retirements and Trump’s immigration crackdown, leaving the economy needing fewer new jobs each month simply to hold unemployment steady.

The Labor Department also revised down February and March payroll gains by a combined 16,000. ADP’s private-sector tracker, meanwhile, showed 109,000 jobs added in April, the strongest pace since January 2025. Those details suggest the headline figure masks some softening even as the broader picture refuses to crack.

The stronger-than-expected report undercuts immediate pressure on the Federal Reserve to cut rates. With inflation climbing to 3.3 percent in March after the gas price spike, Faucher said the data “actually makes it less likely that we see a rate cut anytime soon. The job market is solid. Let’s get inflation back down to 2%. This is not the time to cut rates.” The central bank now has political cover to hold steady while it waits for energy prices to settle.

Whether businesses keep viewing the conflict as temporary will decide if April’s defiance becomes a trend or merely a pause before higher energy costs finally bite.

Original reporting: The Indian Express.