March Job Growth Surprises Amid Trade War Fears

The Labor Department reported on Friday that job growth in March surpassed expectations, offering a momentary sense of stability in the labor market.

According to the Bureau of Labor Statistics, nonfarm payrolls rose by 228,000 in March, a significant increase from the revised 117,000 in February and exceeding the Dow Jones forecast of 140,000.

Despite the strong payroll growth, the unemployment rate edged up to 4.2%, slightly above the anticipated 4.1%, as the labor force participation rate also saw an uptick.

While the headline figures were optimistic, they emerged amid a climate of uncertainty following President Donald Trump’s tariff announcement earlier this week, which has heightened concerns about a potential global trade war and its possible repercussions on economic growth.

Reaction in the stock market was muted in light of the report; futures associated with the Dow Jones Industrial Average slightly recovered from earlier losses but remained down by over 900 points, while Treasury yields stayed sharply negative.

“The unexpectedly positive jobs report will help mitigate immediate concerns about a slowdown in the U.S. labor market,” remarked Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management. “Nonetheless, the focus remains heavily on the tariffs rather than the jobs data.”

The president’s announcement included a blanket 10% duty on all trading partners, accompanied by various reciprocal tariffs that have already elicited backlash from China and other nations. Following these developments, Wall Street has experienced significant sell-offs over the last two days, as investors seek refuge in fixed income assets.

In a message on Truth Social, Trump highlighted the robust job numbers, stating, “GREAT JOB NUMBERS, FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING. HANG TOUGH, WE CAN’T LOSE!!!”

While previous indicators had suggested a resilient labor market, the recent tariff actions raise the likelihood that companies may pause hiring as they evaluate the implications of the new trade environment.

The March employment figures indicated ongoing strength in the labor market, despite substantial downward adjustments to January and February’s job counts. Notably, February’s initial estimate was revised downward by 34,000, while January’s growth now stands at 111,000, down by 14,000 from earlier estimates.

Average hourly earnings rose by 0.3% month-over-month, aligning with expectations. However, the annual growth rate of 3.8% was slightly below forecasts by 0.1 percentage point, marking the lowest increase since July 2024. The average workweek remained stable at 34.2 hours.

In March, the health care sector led job growth, adding 54,000 positions, which is consistent with its 12-month average. Social assistance and retail sectors also contributed significantly, each adding 24,000 jobs, while transportation and warehousing sectors experienced a gain of 23,000 jobs.

Meanwhile, federal government employment saw a slight decline of 4,000 jobs, despite efforts from Elon Musk’s Department of Government Efficiency to reduce the federal workforce. The BLS clarified that workers on severance or paid leave still count as employed. A recent report from consultancy Challenger, Gray & Christmas indicated that layoffs related to DOGE have surpassed 275,000 so far.

“The jobs report is a positive indicator that the economy continues to add jobs amid tariff-related uncertainties and cuts to federal positions,” noted Glen Smith, chief investment officer at GDS Wealth Management. “However, this data is reflective of past performance and does not provide insights into future employer hiring trends.”

A broader measure of unemployment, which includes not only those actively searching for jobs but also workers who are employed part-time for economic reasons, dipped to 7.9%.