The US economy posted unexpectedly strong job gains in March, data showed Friday, in a development hailed as a win by US President Donald Trump’s administration but seen with caution by analysts.<\/p>\n
The world’s largest economy gained 178,000 jobs in March, after losing 133,000 in February, and the unemployment rate dropped by 0.1 percentage-points to 4.3 percent, the Labor Department said.<\/p>\n
Friday’s data significantly beat analyst expectations, with economists polled by Dow Jones Newswires and the Wall Street Journal expecting an increase of 59,000 jobs.<\/p>\n
The data was stronger than forecast, “but vastly overstates the sustainable pace of job growth,” said Oxford Economics lead US economist Nancy Vanden Houten.<\/p>\n
“The end of a strike, seasonal quirks and a rebound after harsh winter weather likely boosted job growth in some sectors,” she said.<\/p>\n
The White House, however, touted the numbers as a major success.<\/p>\n
“Americans can rest assured that after the short-term disruptions of Operation Epic Fury are behind us, America’s economic resurgence is set to only accelerate,” said spokesperson Kush Desai, referring to the US-Israel war on Iran.<\/p>\n
– Health care recovery –<\/p>\n
Much of March’s recovery was fueled by health care jobs, which have remained resilient even as labor demand has dropped in other sectors.<\/p>\n
Health care added 76,000 jobs in March, after having lost jobs the month before, in part due to strike actions.<\/p>\n
Employment in construction also grew by 26,000 in March, although the Labor Department flagged that it had changed little over its level from a year ago.<\/p>\n
Federal government employment continued to decline, down 11.8 percent since October 2024. Trump has taken a hatchet to the sector in a drive aimed at cost-cutting and reducing the size of government.<\/p>\n
The new data reflected a revision in the figures for January and February, showing employment for those two months combined was 7,000 lower than previously reported.<\/p>\n
– ‘Look through the noise’ –<\/p>\n
The US-Israel war on Iran has engulfed the Middle East, sent oil prices surging and snarled supply chains, leading to fears of a global economic slowdown.<\/p>\n
Analysts signaled caution as the economic impact of the war begins to hit Americans.<\/p>\n
Nationwide Chief Economist Kathy Bostjancic said the March report showed the labor market was in “good standing,” with “broad-based gains in the private sector.”<\/p>\n
Oxford Economics’ Houten, however, said the report “doesn’t change our assessment that the downside risks to the labor market have increased” due to the war.<\/p>\n
“As the labor market softens due to the fallout from the war, we expect the unemployment rate to edge up,” she said.<\/p>\n
High energy prices tend to drive up production costs, curbing economic activity, with analysts expecting the current “low-hire, low-fire” trend to continue.<\/p>\n
“If you look through the noise you have, you know that same picture that we’ve been looking at, which is a labor market that’s holding up, but that has become more fragile, and that remains stuck in this low-hire, low-fire type of environment,” EY-Parthenon Senior Economist Lydia Boussour told AFP.<\/p>\n
– Fed fallout –<\/p>\n
Uncertainty about the war’s economic shock has so far led policymakers at the Federal Reserve to adopt a wait-and-see approach on interest rate moves, as they balance curbing stubbornly high inflation with managing unemployment.<\/p>\n
Unemployment rates have remained relatively steady in the United States — but the figure has hidden churn under the surface, analysts warn, as weak jobs growth has been matched by a drop in labor supply.<\/p>\n
That drop in supply is largely attributed to Trump’s crackdown on migrants.<\/p>\n
For Fed policymakers, however, inflation currently appears to be a bigger risk than unemployment.<\/p>\n
“We are getting mixed signals, with some key indicators showing signs of steadying while others are suggesting a weakening labor market,” said New York Fed President John Williams on Monday.<\/p>\n
EY-Parthenon’s Boussour said Friday’s report will provide “a little bit of reassurance and a little bit of breathing room for the Fed to focus on the inflation side of their mandate in the coming months.”<\/p>\n
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