March Hiring Beats Expectations

Which means almost nothing given Wednesday's tariffs

This post is sponsored by KODIAK – Proven Workforce Solutions. I wouldn’t accept a sponsor for this newsletter unless they were 1) a company I trust and 2) addressing critical issues like skilled labor shortages in construction. KODIAK, which recently merged with Pivot, checks both those boxes. Their mission is to help construction companies find experienced talent, including engineers and project managers for Direct Hire, as well as skilled craft professionals like welders and electricians for contingent staffing. With over three decades of experience, I encourage contractors struggling to find workers to consider KODIAK.

Writing about March’s labor market data after Wednesday’s tariff announcements is kind of like reviewing a patient’s routine blood work from a month ago while they’re in shock trauma with a stab wound to the neck.

That said, the blood work was pretty good; U.S. employers beat expectations by adding 228,000 jobs in March, although January and February’s job growth was revised lower by a combined 48,000 jobs.

The unemployment rate ticked up to 4.2%, but it mostly rose for the right reasons. The labor force grew, and the labor force participation rate rebounded from the sharp decline in February.

Average hourly wages rose at a decent clip for the month and are now up just 3.8% year over year. That’s the slowest annual growth since March 2020. Consider that a positive development on the inflation front.

Looking at it by industry: health care continues to add jobs at a blistering pace. The growth in trade, transportation, and utilities was due to a sizable jump in retail employment and a curiously large increase in courier and messenger employment.

Mining and logging, which includes oil and gas extraction, lost jobs for the month, as did information (think tech and media). Manufacturing posted anemic employment growth in March, with several manufacturing subsegments losing jobs.

While government employment grew at a healthy enough pace, federal government employment declined by 4,000 jobs for the month. Expect ongoing decreases in that category, even with Musk on his way out of DOGE.

Finally, it wasn’t a great month for construction job growth. You can read what Anirban had to say on that over at ABC.

The Upshot

The labor market was healthy enough in March. That doesn’t mean much given Wednesday's tariff announcements. We’ve already started to see some manufacturing layoffs in response to tariffs, and there will be more where that came from.

It doesn’t have to be this way. Congress could take back the power to implement tariffs, or the president could reverse course. I’m not going to hold my breath.

What’s Next?

Anirban is currently working on Week in Review, our every Friday post where we concisely cover everything you need to know about the economy, and we’ll have that out in the next few hours. That’s just for paying subscribers. If that’s not you and you want it to be, just click the button below: