The number of jobs in the U.S. in March grew three times stronger than expected. What to expect from the Fed?

The number of nonfarm jobs in the U.S. increased about three times stronger in March than economists had expected. This is good news for the market after an unexpected decline in February.

Nonfarm payrolls rose by 178,000 jobs in March, the U.S. Bureau of Labor Statistics (BLS) reported. Economists surveyed by Bloomberg had expected an increase of 65,000 after a sharp drop in February, Yahoo Finance noted. February's data was revised up to 133,000 positions from 92,000.

The unemployment rate dropped slightly to 4.3% in March after 4.4% in February. The number of the unemployed amounted to 7.2 million. Both values remained virtually unchanged compared to March 2025.

Job gains were seen in March in health care, construction, and transportation and warehousing. Employment in the federal government continued to decline.

The yield on short-term U.S. government bonds rose slightly after the BLS publication: by about 0.06 percentage point to 3.86%, writes the Financial Times.

The number of jobs rose in the U.S. after a strike by health care workers ended and the weather improved after winter storms, Reuters noted. On the other hand, risks are mounting due to the U.S. war with Iran, and it is unclear when it might end. The war is a new source of uncertainty for businesses, and economists expected a hit to the labor market in the second quarter, the agency added. Mass migrant deportations under President Donald Trump are also contributing to the worsening situation, Reuters claimed.

The labor market data comes after Federal Reserve Chairman Jerome Powell's statements this week. According to him, the regulator does not need to rush to respond to the energy shock caused by the war in the Middle East: monetary policy is "in a good position," the Financial Times reports. The labor market is one element of the Fed's dual mandate, along with inflation.

Many economists expect that the state of the labor market will convince the Fed to keep the rate at the meeting on April 28-29, along with rising inflation due to the energy shock and the continuing effect of duties, writes Barron's. At the same time, there is still a possibility of a rate hike this year, although in early 2026 such an outcome seemed doubtful, the publication noted.

"If the labor market stalled when the economy was in pretty good shape before the conflict in the Middle East began, heightened geopolitical, economic and market tensions will not encourage businesses to suddenly start hiring now," ING chief international economist James Knightley said in a note quoted by Barron's.

To maintain a relative balance in the labor market and stable unemployment, the U.S. economy is probably enough growth at the level of 25 000 - 45 000 jobs per month, Barron's noted. Jobless claims remain at relatively low levels, with initial claims falling by 9,000 to 202,000 in the week ended March 28. The level of layoffs also remains subdued overall, despite announcements of layoffs at major companies, including Amazon, this year, Yahoo Finance wrote.

"Companies appear to be banking on employee retention rather than expansion, limiting near-term downside risks to employment despite weak hiring momentum," Nationwide economist Daniel Wilhaber said in a note from Barron's. The pace of private sector hiring is likely to remain subdued in the coming months, especially given the uncertainty surrounding rising energy costs, he said.

This article was AI-translated and verified by a human editor