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The U.S. labor market added more jobs than expected in March despite the federal government’s layoffs and increased pessimism about the economy amid President Donald Trump’s rollout of his tariff plans.
Employers added 228,000 jobs in March on a seasonally adjusted basis, rising from a downwardly revised 117,000 in February and beating the average estimate of 130,000. The non-seasonally adjusted gain unexpectedly picked up to 209,000 from a downwardly revised 116,000.
The jobless rate nonetheless increased to 4.2% from 4.1%, as projected. Growth in hourly wages of 0.30% also matched the consensus estimate.
One half of the Federal Reserve’s dual mandate is maintaining full employment — the other half is controlling inflation — so better-than-expected employment growth may decrease the odds of the central bank cutting interest rates.
“The coming employment reports will provide timely evidence on possible policy effects” from Trump’s tariffs, deportations, and DOGE-driven firings of civil servants, Goldman Sachs (GS-6.87%) economists Ronnie Walker and Jessica Rindels wrote in a note.
The bank projects about 25,000 job losses caused by Elon Musk’s task force. Goldman Sachs’ overall forecasts are slightly more optimistic than the average.
Labor indicators have been mixed this week. On Thursday, data showed that initial jobless claims for the week through March 29 unexpectedly fell to 219,000, but continuing claims for the seven days to March 22 increased by more than estimated, to 1.90 million.
Additionally, U.S. employers announced 275,240 job cuts in March, an increase of 60% month on month and a tripling year on year, according to a report from Challenger, Gray & Christmas released Thursday. The outplacement firm attributed the surge to actions by DOGE.
On Wednesday, ADP’s (ADP-5.09%) survey showed employers added 155,000 jobs in March, more than expected, increasing from an upwardly revised 84,000 in February.
And regardless of today’s numbers, the labor market could deteriorate very quickly amid Trump’s new tariffs, according to Yardeni Research.
“The worst-case scenario is a recession if high tariff rates stick, leading to a slowdown in business and consumer spending that cause layoffs,” the firm wrote in a QuickTakes note Thursday. “We raised our odds of a stagflation/recession scenario from 35% to 45% on Monday.”