The U.S. labor market probably held up fairly well in March despite the federal government’s layoffs and increased pessimism about the economy amid President Donald Trump’s rollout of his tariff plans.
The economy may have added 130,000 jobs last month on a seasonally adjusted basis, down from 151,000 in February, according to the consensus estimate on FactSet (FDS-2.77%), with the jobless rate set to increase to 4.2% from 4.1%. Growth in hourly wages probably held steady at 0.30%.
One half of the Federal Reserves dual mandate is maintaining full employment — the other half is controlling inflation — so a bigger-than-expected weakening in employment growth may increase the odds of the central bank cutting interest rates this year.
“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-9.14%) 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. Its overall forecasts are slightly more optimistic than the average.
The methods the Bureau of Labor Statistics uses for seasonal adjustment will probably mask a more-significant slowing, Jefferies (JEF-13.02%) economists Thomas Simons and Sam Saliba warned. Non-adjusted payroll growth may have slowed to 127,500 from 140,000, according to the average estimate.
Labor indicators have been mixed this week. On Thursday, data showed 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-0.68%) 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 on Thursday. “We raised our odds of a stagflation/recession scenario from 35% to 45% on Monday.”
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