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Key takeaways

  • The U.S. economy added a robust 228,000 jobs in March, beating forecasts of 140,000.
  • The unemployment rate ticked up slightly to 4.2% in March from 4.1% in February. Meanwhile, average hourly earnings grew by a firm 0.3% month-over-month, as expected.
  • The March jobs report underscores the resilience of the labor market through March. This supports our strategists’ expectation for the Federal Reserve to keep interest rates on hold in the near term as it evaluates how the economy responds to the expected meaningful increase in tariff rates.
  • While our strategists expect U.S. economic growth to decelerate, they do not yet see a recession as the base case. For investors, building a resilient, diversified portfolio remains vital during times of heightened market volatility.

Contributors

Cristina Dwyer

Editorial staff, J.P. Morgan Wealth Management

 

The U.S. economy added a robust 228,000 jobs in March, above consensus expectations of 140,000, according to the Bureau of Labor Statistics (BLS).1

However, there were net downward revisions of 48,000 to the prior two months. Job gains were revised down by 34,000 to 117,000 in February and down by 14,000 to 111,000 in January. This lowers the three-month average payroll growth to 152,000 from 200,000 in February.2

The bar chart illustrates the monthly change in nonfarm payroll employment in thousands from January 2024 to March 2025.

U.S. nonfarm payroll employment

 

Monthly change in thousands for U.S. nonform payroll employment

 

The bar chart titled "U.S. nonfarm payroll employment" illustrates the monthly change in thousands from January 2024 to March 2025. Each bar represents the net change in employment for a given month. The chart shows fluctuations in employment growth over the period, with notable peaks in March 2024, September 2024, November 2024 and December 2024, where the monthly change exceeded 250,000. The chart shows a noticeable increase in U.S. nonfarm payroll employment from February 2025 to March 2025. In February 2025, the employment change was relatively modest, but in March 2025, there is a significant rise, with the monthly change reaching a level comparable to some of the higher peaks observed in the previous year. This suggests a strong rebound or growth in employment during March 2025, following a period of lower growth in the preceding month.

 

Source: Haver Analytics. Data as of April 4, 2025

The bar chart illustrates the monthly change in nonfarm payroll employment in thousands from January 2024 to March 2025.

 

Overall, March’s employment report reaffirms that the labor market remains healthy ahead of potential widespread U.S. tariff increases. If President Donald Trump’s tariff announcement on April 3 is fully implemented, our strategists would expect economic growth to eventually soften, which could weaken the labor market. While the baseline 10% tariff rates are likely to go into effect on April 5, there remains room for negotiations before the higher ‘reciprocal’ tariffs go into effect on April 9.

What does February 2025's job report mean for investors?

For investors, the latest report indicates that the labor market remains on solid footing.

Vinny Amaru, a Global Investment Strategist for J.P. Morgan Wealth Management, says, “Friday’s report shows that the U.S. labor market remained steady in March, but all eyes are on the upcoming employment reports to see how the labor market responds to a significant rise in tariffs. To the extent that they are implemented as announced, we see meaningful downside risks to employment growth in the coming quarters.”

While our strategists expect economic growth to decelerate, they do not yet see a recession as the base case.

How could the Federal Reserve react to February 2025's jobs report?

This report keeps our strategists’ views intact: The Fed is likely to keep interest rates unchanged in the near term as it assesses the health of the U.S. economy within the backdrop of heightened tariff policy uncertainty. Our strategists’ view continues to be that the Fed will lower interest rates throughout the course of the year and could accelerate the pace of interest rate cuts if growth were to weaken meaningfully.

Before the upcoming Federal Open Market Committee meeting on May 6 to 7, the employment report on May 2 will provide a sense of how the labor market is responding to the recent tariff announcements. The Fed will also pay close attention to the next Consumer Price Index (CPI) release on April 10. CPI is a key inflation measure that the Fed will use to monitor inflation’s progress toward its 2% goal and will then be able to assess how higher tariff rates are impacting goods prices.

Industries that gained and lost jobs in March 2025

Job gains were concentrated in the health care, transportation and warehousing, and leisure and hospitality sectors.3 Employment rebounded in the retail sector, as workers returned from a strike.

Government employment also rose. Within government employment, there was further decline in federal government jobs, which fell by a more modest 4,000 after declining by 11,000 in February.4 This likely reflects recent measures from the Department of Government Efficiency to reduce the size of the federal civilian workforce.

Elsewhere, jobs gains were little changed, including in mining, quarrying, oil and gas extraction, among other industries5

Unemployment rate and labor force participation ticked up slightly in March 2025

The household survey, which measures the unemployment rate, also pointed to a steady labor market. The unemployment rate rose slightly to 4.2% in March from 4.1% in February.6 It’s been roughly in the 4% range for the past several months, which shows the labor market remains on solid footing.

The labor force participation rate, which indicates the percentage of working-age individuals who are employed or actively seeking work, was also little changed. It edged up to 62.5% in March from 62.4% in February, consistent with the range seen in the past few years.7 However, the participation rate for prime-age workers (ages 25 to 54) fell to the lowest level in more than a year.

Wage growth remains steady

Average hourly earnings increased by 0.3% month-over-month (MoM). This reading met expectations and was in line with the twelve month average of 0.3% MoM. The year-over-year change in average hourly earnings was 3.8%, down from 4% in February, but still roughly in the range of where wages have been growing for the past year.8 The latest data shows that wages continue to grow at a healthy pace that should support consumer spending.

As always, consult with a J.P. Morgan advisor to understand how this data could impact your portfolio.

 

References

1.

Bureau of Labor Statistics, “Employment Situation News Release.” (April 4, 2025)

2.

Ibid.

3.

Ibid.

4.

Ibid.

5.

Ibid.

6.

Ibid.

7.

Ibid.

8.

Ibid.


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