Market Insight: NFP Data Raises Eyebrows Ahead of Fed Decision

The latest U.S. Non-Farm Payroll (NFP) report initially appeared strong, with 177,000 jobs added in April—beating expectations of 133,000. Unemployment remained steady at 4.2%, suggesting a stable labor market at first glance. However, a closer look reveals a more nuanced picture.

A significant portion of the job gains—29,000—came from the transportation and warehousing sector. This spike is attributed to businesses rushing to import goods ahead of newly implemented tariffs, an artificial boost that does not reflect organic labor market strength. In contrast, federal employment fell by 9,000 in April, contributing to a total loss of 26,000 federal jobs in 2025, reflecting ongoing fiscal tightening.

Moreover, past NFP data was revised downward by 58,000 jobs—another red flag for analysts. The data raises concerns about inflation remaining sticky in the months ahead due to front-loaded imports, which could impact consumer prices.

Looking ahead, the Federal Reserve is expected to hold interest rates steady at 4.5% during its upcoming decision, maintaining a data-dependent approach. Fed Chair Jerome Powell is likely to remain neutral to slightly dovish in tone, considering labor and inflation data, as well as ongoing tariff developments.

Elsewhere in the markets, the Australian dollar may strengthen on improved China trade sentiment, while the Japanese yen is gaining traction as risk appetite rises. Bitcoin is also trending upward, signalling broader optimism.

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