US employers added 236,000 jobs in March, unemployment at 3.5%

US hiring slowed in March – but the jobs market remains historically tight in a trend that could put pressure on the embattled Federal Reserve to proceed with another interest rate hike.

Nonfarm payrolls increased by 236,000 last month, according to the Labor Department’s closely-watched March jobs report released Friday.

The figure was roughly in line with expectations. Prior to the March jobs report’s release, economists polled by Dow Jones had forecast jobs growth of 238,000.

The US unemployment rate sank slightly to just 3.5%, down from 3.6% in February.

“Employment continued to trend up in leisure and hospitality, government, professional and business services, and health care,” the Bureau of Labor Statistics said in a release.

Average hourly wages ticked 0.3% higher, slightly more than economists expected. Wages have increased by just 4.2% over the last 12 months – the slowest clip since mid-2021.

Elsewhere, hiring in February was revised upward to show the US economy added 326,000 jobs that much – 15,000 more than what was previously reported.

Investors anxiously awaited the latest hiring data given lingering uncertainty about the Fed’s policy path. Fed Chair Jerome Powell has often cited tightness in the jobs market as the central bank enacted a series of rate hikes over the last year.

“The labor market is cooling down though not as quickly as the Fed would like it to,” Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington, told Bloomberg. “This keeps a May hike in play, though just barely.”

The market is pricing in a 69% probability that the Fed will implement another quarter percentage point interest rate hike at its next policy meeting on May 2-3, according to CME Group’s FedWatch tool. Investors see just a 31% chance that the Fed will pause its tightening campaign.

The Fed implemented a quarter-point hike last month, signaling its resolve to tame inflation despite weakness in the US banking sector. Inflation is still running abnormally high – with prices jumping 6% year-over-year in February, according to last month’s Consumer Price Index.

Powell and other experts have suggested that bank crisis could lead to tightened credit conditions that would further cool prices.

US stock futures were mixed as the market digested the March jobs report. Dow Jones Industrial Average futures fell about 55 points, while Nasdaq and S&P 500 futures were flat.

Hiring stayed resilient even as major US companies slashed jobs and enacted cost-cutting measures amid signs of a slowing economy.

Disney began its first of three planned rounds of layoffs in late March as part of plans to cut about 7,000 jobs and $5.5 billion in expenses.