In Reverse: April 28 – May 2

GDP’s winning streak ended as 2025 began, but the labor market remained resilient in April. Here are the five things we learned from U.S. economic data released during the week ending May 2.

The U.S. economy contracted for the first time in three years during the first quarter. Real Gross Domestic Product (GDP) shrunk 0.3 percent on a seasonally adjusted annualized basis, its biggest drop since the 1.0 percent decline of the first three months of 2022. The largest drag on the economy was the 41.3 percent surge in imports (as companies rushed to beat the tariffs and cost 5.03 percentage points in GDP growth) and a decline in federal government expenditures (-0.33). Conversely, the resulting swelling of private inventories added 2.25 percentage points to economic growth. Other positive GDP contributors included personal spending (+1.21), nonresidential (+1.29) and residential (+0.05) fixed investment, exports (+0.19), and state/local government expenditures (+0.08). The Bureau of Economic Analysis will update its Q1 GDP estimate twice over the next two months.

Payroll gains remained on track in April. Nonfarm payrolls expanded by a seasonally adjusted 177,000, slightly down from March’s increase of 185,000. In the same report, the Bureau of Labor Statistics lowered its estimates of February and March job gains by a combined 58,000. Private sector employers added 167,000 jobs, including 156,000 in the service sector. Industries adding the most net jobs were health care/social assistance (+58,200), transportation/warehousing (+29,000), and leisure/hospitality (+24,000). Average weekly earnings of $1,236.86 was up 4.1 percent from a year earlier.

Based on a separate household survey, the unemployment rate held steady at 4.2 percent, while the labor force swelled by 518,000. The resulting labor force participation rate of 62.6 percent represented a 1/10^th percentage point increase. The 25-54 labor force participation rate rose by 3/10^ths of a percentage point to 83.6 percent. Also rising was the typical length of unemployment, adding 6/10^ths of a week to 10.4 weeks. 4.690 million people held a part-time job for “economic reasons,” down 80,000 from the prior month. The broadest measure of labor underutilization—the U-6 series—slipped by 1/10^th of a percentage point to 7.8 percent.

Consumer spending rose—even as prices held steady—in March. The Bureau of Economic Analysis estimates real Personal Consumption Expenditures (PCE) jumped a seasonally adjusted 0.7 percent, well above February’s 0.1 percent advance. Goods spending surged 1.3 percent, boosted by increases for durable (+3.2 percent) and nondurable (+0.4 percent) goods. Services expenditures expanded 0.4 percent. Without adjustments for price changes, nominal PCE increased 0.7 percent, funded by a 0.5 percent gains in both nominal personal and disposable income. Real disposable income also was up 0.5 percent. The savings rate narrowed by 2/10^ths of a percentage point to +3.9 percent. Over the past year, real PCE has swelled 3.3 percent, supported by a 1.7 percent increase in real disposable income. Inflation was mild in March. The PCE price index and core PCE price index (net of energy and food) each grew by less than 0.1 percent. Over the past year, the two inflation measures were up 2.3 percent and 2.6 percent, respectively.

Airplanes drove a sharp rise in factory orders in March. The Census Bureau reports new orders for manufactured goods rose 4.3 percent to a seasonally adjusted $618.8 billion. Orders over the first three months of 2025—$1.751 trillion—were up 3.0 percent over the comparable year-ago months. Durable goods orders surged 9.2 percent, while nondurables slipped 0.3 percent. Net of transportation goods, factory orders slowed 0.2 percent. Shipments dropped 0.1 percent to $596.2 billion. Year-to-date shipments totaled $1.728 trillion, 1.6 percent ahead of their year-ago pace. Unfilled orders increased for the eighth time in nine months, gaining 2.0 percent to $1.429 trillion, while inventories eked out a 0.1 percent gain to $865.3 billion. 

Manufacturing activity contracted in April. The Manufacturing PMI lost 3/10^ths of a point to 48.7. This was the second straight month (and the 28^th time over the past 30 months) in which the Institute for Supply Management measure was below 50.0, indicative of a contracting manufacturing sector. New orders (47.2) and employment (46.5) measures improved during the month, while indices for production (44.0) and inventories (50.8) declined. Eleven manufacturing industries grew in April, led by apparel, petroleum/coal products, and plastics/rubber products. The press release noted, “[d]emand and output weakened while input strengthened further, conditions that are not considered positive for economic growth.”

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending April 26, 2025, First-Time Claims, seasonally adjusted): 241,000, +18,000 vs. the previous week, +32,000 vs. the same week a year earlier). 4-week moving average: 226,000 (+7.5% vs. the same week a year earlier).
• Conference Board Consumer Confidence (April 2025, Index (1985=100), seasonally adjusted): 86.0 (March 2025: 93.9; April 2024: 97.5).
• Job Openings and Labor Turnover (March 2025, Private Job Openings, seasonally adjusted): 7.192 million (-288,000 vs. February 2025; -11.1% vs. March 2024).
• Pending Home Sales (March 2025, Index (2001=100), seasonally adjusted): 76.5 (+6.1% vs. February 2025; -0.6% vs. March 2024).
• FHFA House Price Index (February 2025, Purchase-Only Index, seasonally adjusted): +0.1% vs. January 2025; +3.9% vs. February 2024.
• S&P Case-Shiller Home Price Index (February 2025, National Index, seasonally adjusted): +0.3% vs. January 2025; +3.9% vs. February 2024.
• Vehicle Sales (April 2025, Auto and Light Truck Sales, seasonally adjusted annualized rate): 14.386 million (-1.9% vs. March 2025; +10.8% vs. April 2024).
• Construction Spending (March 2025, Value of Construction Put in Place, seasonally adjusted annualized rate) $2.196 trillion (-0.5% vs. February 2025; +2.8% vs. March 2024).
• Agricultural Prices (March 2025, Prices Received by Farmers, not seasonally adjusted): -3.1% vs. February 2025; +16.6% vs. March 2024.
• Bankruptcy Filings (12-Month Period Ending March 31, 2025, Business and Non-Business Filings): 529,080 (+13.1% vs. 12-month period ending March 31, 2024).

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