Companies slowed hiring sharply in April as they braced against potential impacts from President Donald Trump’s tariffs against U.S. trading partners, ADP reported Wednesday.

Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, amid heightened uncertainty over the degree of the tariffs and the impact they would have on hiring plans and broader economic conditions.

The total marked a deceleration from the downwardly revised gain of 147,000 in March and missed the Dow Jones consensus estimate for an increase of 120,000.

“Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,” said ADP chief economist Nela Richardson. “It can be difficult to make hiring decisions in such an environment.”

Wage gains also took a step backwards, rising 4.5% from a year ago for those staying in their jobs, down 0.1 percentage point from March. However, job changers saw an increase to 6.9%, up 0.2 percentage point.

From a sector standpoint, leisure and hospitality posted the biggest gain, adding 27,000 jobs. Others that showed increases included trade, transportation and utilities (21,000), financial activities (20,000) and construction (16,000). Education and health services lost 23,000 positions while information services fell by 8,000.

The ADP estimate serves as a precursor to Friday’s nonfarm payrolls report from the Bureau of Labor Statistics, and the two reports can differ substantially. Economists surveyed by Dow Jones are looking for job growth of 133,000 in the BLS report, which unlike ADP includes government hiring. The unemployment rate is expected to be unchanged at 4.2%.

The U.S. economy contracted in the first three months of 2025, fueling recession fears at the start of President Donald Trump’s second term in office as he wages a potentially costly trade war.

Gross domestic product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation.

Economists surveyed by Dow Jones had been looking for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some Wall Street economists changed their outlook to negative growth, largely due to an unexpected rise in imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.

Indeed, imports soared 41.3% for the quarter, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse in subsequent quarters. Imports took more than 5 percentage points off the headline reading.

Consumer spending slowed during the period but was still positive. Personal consumption expenditures increased 1.8% for the period, the slowest quarterly gain since Q2 of 2023 and down from a 4% gain in the prior quarter.

Moreover, private domestic investment soared during the period, rising 21.9%.

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Germany’s economy expanded by 0.2% in the first quarter from the previous three-month period, preliminary data showed Wednesday, as U.S. tariff tensions threaten the country’s growth outlook.

The figure, released by the German federal statistics office, is adjusted for price, calendar and seasonal variations.

The gross domestic product reading was in line with estimates from economists polled by Reuters. Germany’s gross domestic had contracted by 0.2% in the fourth quarter.

The statistics office attributed the quarterly increase to the fact “that both household final consumption expenditure and capital formation were higher than in the previous quarter.”

Europe’s largest economy has long been sluggish, with its GDP flip-flopping between growth and contraction in each quarter throughout 2023 and 2024. The country has so far avoided technical recession, which is defined by two consecutive quarters of contraction.

Key sectors of the economy, such as autos, have been suffering from stronger competition from China. Other industries including housebuilding and infrastructure have also been going through trying times that have been linked to higher costs, muted investment and bureaucratic hurdles.

Separately, U.S President Donald Trump’s tariff policies have thrust uncertainty onto export reliant Germany which counts the U.S. as its most important trading partner.

As part of the European Union, Germany is facing 20% blanket tariffs on goods exported to the U.S., although these levies have been temporarily reduced to 10% to allow time for negotiations. U.S. duties on steel, aluminum and autos also affect the country.

The German government last week cut its economic outlook to predict stagnation in 2025, with outgoing economy minister Robert Habeck saying Trump’s trade policies and their impact on the country were the main factor behind the revision.

One bright spot could emerge on the horizon. Germany earlier this year made changes to its long-standing debt brake fiscal rule, enabling higher defense spending, and creating a 500 billion euro ($570 billion) fund dedicated to infrastructure and climate investments.

This move has widely been regarded as a positive shift for the German economy, although much still depends on how the changes are implemented.

While Germany’s economy has been sluggish, the local inflation rate has been closing in on the European Central Bank’s 2% target. The country’s consumer price index, harmonized for comparability across the euro zone, came in at 2.3% in March on an annual basis, down from 2.6% in February.

Preliminary inflation figures for April are due out later on Wednesday, with economists polled by Reuters estimating a 2.1% reading.

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