US employers accelerated employment in March. This is a show of incredible strength that analysts warned, and could be a high labour market water level as the Trump administration's economic policies begin to unfold.
Employers added 228,000 jobs last month, the Labor Bureau reported Friday. This is more than expected, up from a revised total of 117,000 in February. The unemployment rate rose from 4.1% to 4.2%.
The data does not reflect the full scope of job cuts stemming from market rattling cleaning fee announcements this week or President Trump's efforts to reduce the federal workforce, based on a survey of households and businesses conducted in the second week of March.
Market response to the report was scarce as traders were obsessed with the threat of a trade war. The S&P 500 fell 6% on Friday. The mood for Gram investors is the biggest since the height of the pandemic, over the rollout of Trump's global tariff campaign following the massive sale on Thursday.
Still, Trump quickly seized the report as evidence that his economic agenda was at work. In a social media post on Friday morning, he wrote:
Job acquisition in March was driven by healthcare and social support employment, reporting an increase of 78,000. The leisure and hospitality sector recovered from dip in January and February – attracting 43,000 jobs from some observers due to bad weather. Retailers added 24,000, while transportation and warehouse reported 23,000 profits.
Diane Swonk, chief economist at accounting firm KPMG, said she was “pleasant and surprised” in her report Friday, but she added that the imminent impact of federal employment cuts and tariffs would mean “this is likely to be a high water level.”
The Labor Bureau announced revised employment numbers in January and February, cutting profits for those months at 45,000, clouding pictures of labor market momentum.
“We still hope for weakness,” Swonk said. “The announcement of layoffs is beginning to be mounted.”
Joe Brusuelas, chief economist at consulting firm RSM, said the report does not reflect the rosy outlook for the labor market. “What we really see is the calm before the storm,” he said.
Deep in the numbers in March, some analysts saw warning signs.
Construction added 13,000 jobs, while average growth is 8,000 jobs per month over the first quarter. This means that overall activity is slower. The industry could be hit hard by the promotion of administrative tariffs expected to increase supply costs and immigration policies affecting key sources of labor.
Manufacturing jobs increased just 1,000 in March in a sector that is likely to be monitored carefully for the knock-on effect of supply chain disruption.
A survey by the Supply Management Institute this week showed contractions in manufacturing activities in March.
“The labor demand in the services sector is much stronger than in the manufacturing sector,” said Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank. He then said workers in the service sector earn more hourly wages than manufacturers do.
“The president seems to want to move Americans from the growing sector to the downsizing sector,” he said. “And he seems to want to move Americans from high-paying jobs to low-paying jobs. They hit me as a very confused and harmful goal.”
The federal workforce fell 4,000 in March, slowing down from the revised 11,000 decline in February. The Trump administration fired about 25,000 probation employees, some of which have at least been temporarily revived as the firing is being challenged in court.
The data showed an overall increase in government employment, which increased by 19,000 in March, leading to state and local government growth.
A slight increase in unemployment rate in March – before it rounded, it rose by a hundredth of points, reflecting an increase in workforce participation.
Strong reporting will help strengthen the Federal Reserve decision at recent conferences to curb interest rate cuts as the economy is in a “good place.” Officials have repeatedly said that central banks can afford to wait for more clarity on the impact of the Trump administration's economic policies.
Officials acknowledge that the president's tariff plans are taking shape, making the economic outlook far more uncertain. Even before the latest round of tariffs announced this week, authorities were hoping for a combination of higher inflation and growth this year.
The April employment report survey, which will be released in early May, will be conducted next week.
Colby Smith Reports of contributions.
