Employers added jobs in March at a much stronger pace than expected, a sign that the labor market remained strong despite economic uncertainty and market turbulence.
The U.S. added 228,000 jobs in March, the Labor Department reported Friday, well above the gain of 140,000 jobs economists polled by The Wall Street Journal had expected to see.
That was more than the 117,000 jobs added in February.
The unemployment rate, which is based on a separate survey from the jobs figures, ticked up to 4.2%. Markets have been jolted this year by the unfolding impact of the Trump administration’s trade policy and government layoffs.
Late Wednesday, the Trump administration announced sweeping new tariffs on countries around the world. The scope and depth of President Trump’s plans shocked investors and businesses.
U.S. stocks plunged on Thursday, and bonds rallied. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all logged their worst percentage declines since 2020.
American households and businesses are becoming more jittery about the economy’s future due to uncertainty about trade policy and rising costs, according to recent surveys.
Regular Americans are squaring up to the prospect of continued high borrowing costs, persistent inflation and tariffs on a wide array of imported goods. Measures of consumer sentiment from the Conference Board and the University of Michigan tumbled again in March. Two-thirds of consumers in the latest Michigan survey said they expect unemployment to rise in the year ahead, the highest reading since 2009.
“Three to four months ago, everyone was pretty upbeat; we thought Trump was going to turbocharge the economy with deregulation and tax cuts—and instead we’ve got austerity, trade protectionism and immigration controls,” said James Knightley, chief international economist at ING Financial Markets.
Some of that hesitation is translating into weak spending. In February, inflation-adjusted consumer spending edged up just 0.1% from the prior month, according to the Commerce Department, though that was better than January, when it declined.
In recent weeks, companies including shipping giant FedEx, retailer Kohl’s and sportswear brand Nike lowered their outlook for sales. Meanwhile, several big airlines cut near-term financial forecasts.
The Federal Reserve cut its growth projections for this year at its most recent policy meeting, while raising its forecasts for the unemployment rate and inflation. The central bank held steady its benchmark federal-funds rate at around 4.3%; its next scheduled meeting is in a month’s time, May 6-7.
Federal employment fell 4,000 in March, and is down by about 15,000 jobs since January. That presumably reflects the hiring freeze and job cuts imposed by the Trump administration and its DOGE initiative. But it is quite a modest impact in the context of the three million-person federal workforce.
In a slightly mixed signal, the average workweek remained at 34.1 hours, a significantly lower than usual number. That could suggest that employers are bringing on workers part time or cutting hours as the business softens.
On a headline basis, this is a solid set of jobs data, especially given the shift in sentiment on the economy during the month. But there are a couple of points to make. January and February hiring was weaker than expected; better weather and the ending of strikes clearly lifted the headline number, and the unemployment rate nudged higher despite the bumper headline gain. But the much bigger picture, as I mentioned earlier, is that this reading already feels like ancient history given the new tariff regime that we are about to head into.
Average hourly earnings growth has slowed from a year-on-year perspective to 3.8%. That’s the smallest such gain since last July. For some time now, earnings gains have outpaced inflation. But now with tariff hikes coming through, there’s a danger household incomes will be squeezed in real terms. Indeed, JPMorgan Chase economists this week warned that disposable incomes (those after taxes) may even contract in inflation-adjusted terms in coming months.