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The April jobs report showed steady unemployment at 4.3% and solid payroll growth, suggesting the labor market is stabilizing toward more hiring, which gives the Federal Reserve little urgency to adjust rates as it monitors inflation risks from the Iran war.

What caught our eyes this week

No emergencies in the employment data

The April employment report we got on Friday was solid. The unemployment rate held steady at a respectable 4.3%. Job creation was encouraging, with nonfarm payrolls up 115,000. This is the second good report in a row after more than a year of volatile labor data. It’s still too early to call, but it does appear the fragile balance of “no-hire, no-fire” is beginning to resolve in favor of more hiring as opposed to more firing. The report reinforces the Federal Reserve’s recent posturing as it tries to assess the impact of the Iran war on the inflation side of its mandate. With no sense of urgency from the employment side, expect the Federal Open Market Committee (FOMC) to take its time to look for signs that an energy shock is feeding through to broader underlying inflation pressures before resuming a path back to neutral monetary policy. Markets now overwhelmingly see the FOMC on hold for the remainder of the year, with odds of a rate hike quietly building. They are slim odds, but still more likely than a rate cut at this point, according to markets.

Graph showing the monthly change in US nonfarm payrolls from May 2025 to May 2026

CHART OF THE WEEK: Cerity Partners, FactSet, 5/11/2026

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