Employers added 303,000 jobs in March, surging past economic forecasts

U.S. employers added 303,000 jobs in March, far surpassing economists’ predictions and signaling the labor market remains strong.

Analysts surveyed by FactSet expected businesses had added 200,000 jobs last month. The unemployment rate held steady at 3.8%, the U.S. Department of Labor said on Friday.

The latest data, which continues the trend of scorching hot hiring earlier this year, is likely to play into the Federal Reserve’s decision on whether to cut its benchmark interest rate this year, and by how much. On Thursday, a Fed official warned that interest rate cuts may not materialize in 2024, contrary to expectations of many economists, given the strong labor market and stubbornly high inflation. 

“Today’s jobs numbers surprised to the upside once again as the U.S. labor market continues to show steady strength and resilience,” Eric Merlis, managing director and co-head of global markets at Citizens Bank. “The economy seems to have adapted to a new normal of higher rates and today’s data does not increase the urgency for the Fed to make cuts.”

The health care industry added 72,000 jobs last month, the most of any sector, the Labor Department said, followed by government with 71,000 new jobs and leisure and hospitality with 49,000 hires. The construction industry hired 39,000 people. There were little to no job gains in the retail, financial services and transportation and warehousing sectors.

“The 49,000 increase in leisure and hospitality jobs could also be weather related, but it was still enough to restore employment in that sector finally back to its pre-pandemic level,” Paul Ashworth, chief North America economist at Capital Economics, said Friday.

Average hourly earnings rose 12 cents to $34.69, after a hike of 18 cents in January. 

“Some had been hoping that the Federal Reserve would cut interest rates at its June meeting,” Lisa Sturtevant, chief economist at Bright MLS, said in an email. “However, with today’s strong jobs report, it is all but certain that the first rate cut won’t be before July. As a result, mortgage rates are likely going to stay elevated for longer.”

The Federal Reserve has raised interest rates 11 times in the last two years as it battled the hottest inflation in 40 years. While price increases are moderating, inflation has remained above 3% in 2024, higher than the Fed’s goal of 2%. 

Aside from Friday’s jobs numbers, Wall Street will be closely watching the next consumer price index report, or CPI, which is scheduled to be released on April 10. Economists expect prices rose 3.5% on an annual basis in March, which would represent an uptick from the previous month’s 3.2% increase, according to FactSet.