March Jobs Data May Keep Consumers on Edge as Unemployment Inches Up

The latest jobs report, released Friday (April 4), may prove to be a high-water mark for hiring — reflecting March’s surge before the maelstrom of tariffs and trade wars.

The trends point to a gradual cooling, but then again, that was before this week’s announcements that shook global markets, which in turn are likely to turn businesses more cautious about staffing. So: The cooling may evolve into a chilling.

And in terms of end market demand — that would be consumers and households, of course — growth in the unemployment rate and a slowdown in wage growth may move them to become incrementally more cautious about spending. That wage growth may pale in comparison to price increases resulting from tariffs, and inflation expectations are far outpacing wage growth.

Unemployment Gains a Bit of Ground

As the Bureau of Labor Statistics reported on Friday, the headline figure shows that unemployment inched up to 4.2%, returning to year-long highs, and above the averages for 2024 (4%) 2023 (3.6%) and 2022 (3.6%). Non-farm payroll employment rose by 228,000 in March on seasonally adjusted terms, more than in February (117,000) and January (111,000).  Consensus had held that the payrolls would increase by about 117,000 positions. As for the unemployment rate, we note that the actual figure may be understated, as the impact of DOGE cuts to government rosters has yet to be fully reflected.

Job gains occurred in health care (added 54,000 jobs), social assistance, and in transportation and warehousing. Employment also increased in retail trade (+24,000), partially reflecting the return of workers from a strike.

In March, average hourly earnings for all employees on private non-farm payrolls rose by 0.3%, to $36. Over the past 12 months, average hourly earnings have increased by 3.8%. Recall that the latest CPI release pointed towards a 2.8 percent rise in consumer prices over the last 12 months, so the read across is that there’s roughly a 1% “surplus” in spending power, at least as measured last month.  But wage growth is de Yearlong increases in wages peaked in November 2024 (4.1%) and have trended downward since

As reported by PYMNTS, current signals from the jobs market continue to point towards a gradual cooling, albeit no strong shifts have yet presented themselves — but as noted above this can change rapidly. Earlier this week it was disclosed that job openings declined to 7.57 million in February, down from 7.76 million in January and 8.45 million in February 2024. Quits and layoffs changed  little.

As for consumer spending, we reported at the end of last month that “real” consumer spending was already slowing, when inflation is factored in. Households had boosted their savings, just a bit, and most individuals surveyed expect to see unemployment rise over the next few months. The March data released this morning is unlikely to mollify that expectation. Inflation projections, again, on the part of consumers, and   contributing to gloomy sentiment, have shown the widest “jump” in three decades.

Some Wall Street firms and commentary from the likes of UBS are already estimating that the new round of tariffs could push inflation to more than 5%, which would mean that wages are not going to keep up.

PYMNTS Intelligence data on the paycheck-to-paycheck economy revealed just this week that unpredictability in the macro landscape is has made it harder to plan for the future and to save (and thus have funds on hand for future spending). In January 2025, 40% of consumers identified as planners — a roughly 20% plunge since February of last year.