U.S. employers accelerated hiring in March, and as the Trump administration’s economic policy began to play, analysts warned that the surprising strength could be the high level of the labor market.
Employers added 228,000 jobs last month, a figure far exceeding expectations and up from a total of 117,000 in February, the Labor Department reported on Friday. The unemployment rate rose from 4.1% to 4.2%.
The data, based on a survey of households and businesses in the second week of March, did not reflect the widespread tariff announcements that rocked the market this week, or the entire layoffs caused by President Trump’s efforts to reduce the federal workforce.
The report has had few market responses as traders are fully focused on the threat of a trade war. The S&P 500 index fell nearly 5% at noon. The avid investor sentiment was the biggest since the pandemic after Thursday’s massive sell-off, which was Mr. Trump’s launch in the global tariff campaign.
Still, Mr. Trump quickly grabbed the report to prove that his economic agenda was working. “The number of jobs is great, far exceeding expectations. It's already working,” he wrote in a social media post on Friday morning.
March job proceeds are driven by hiring for health care and social assistance, which totals revenues of 78,000. The January and February lounging and hotel departments recovered from the falls – some observers attributed to the bad weather – and received 43,000 jobs. Retailers increased by 24,000, with a reported growth rate of 23,000.
Diane Swonk, chief economist at KPMG, said she was “wondered her” by Friday’s report, but added that the imminent impact on federal layoffs and tariffs meant “it could be high moisture.”
The Department of Labor released revised numbers for January and February, which reduced earnings by 45,000 in that month, clouding the picture of labor market momentum.
“We still expect weakness,” Ms. Swonk said. “We are starting to see layoff announcements.”
Joe Brusuelas, chief economist at consulting firm RSM, said the report did not reflect the rosy outlook for the labor market. “What we really see is the calm before the storm,” he said.
In March figures, some analysts saw warning signs.
Construction added 13,000 jobs, but the average growth in the first quarter was only 8,000 jobs per month, a sign of slow overall activity. The industry could be hit by the government’s tariff drive, which is expected to increase supply costs and its immigration policies, which will affect key labor sources.
In March, manufacturing jobs increased by just 1,000 in an area that could be carefully observed the impact of supply chain disruptions and served as a focus of the Trump administration’s industrial efforts to promote its gambling tariffs.
Manufacturing activity contracted in March, a survey conducted by the Institute for Supply Management this week showed.
“The labor demand in the service industry is stronger than the manufacturing sector,” said Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank. Moreover, he notes that service workers earn more hourly wages than manufacturing workers.
“The president seems to want to move Americans from growing sectors to growing sectors,” he said. “And he seems to want to move Americans from high-paying jobs to low-paying jobs. Those that make me very confusing and harmful targets.”
The federal labor force fell by 4,000 in March, and 11,000 times after the revision in February. Although the Trump administration has fired about 25,000 probation employees, some of them have since resumed their rulings at least temporarily because the sacks are being challenged in court.
The data show that the overall increase in government work, with an increase of 19,000 in March, driven by growth in state and local governments.
The unemployment rate rose slightly in March – before rounding, it rose by one-tenth of a percentage point – reflecting an increase in participation in the workforce.
Strong reports help strengthen Fed decisions at its recent meeting to lower interest rates as the economy is in a “good place.” Officials have repeatedly said central banks have the ability to wait to be clearer about the impact of Trump’s administration’s economic policies.
Officials have acknowledged that the economic outlook has become more uncertain as the president's tariff plan is shaped. Even ahead of the latest round of tariffs announced this week, officials expect higher inflation and slower growth this year.
The April work report survey will be released in early May and will be conducted next week.
Colby Smith Contribution report.
