The latest official snapshot of the U.S. labor market will arrive on Friday as analysts and policymakers watch for the impact of the Trump administration’s economic policies. Investors, already on edge about the effect of sweeping tariffs on trade, are looking to the report as a gauge of the resilience of the job market, a source of support for the economy as it is threatened by turmoil in financial markets, stubborn inflation and other factors.
The Labor Department report is expected to show that employers added 140,000 jobs in March and that unemployment remained at 4.1 percent, according to a Bloomberg survey of economists.
But some analysts caution that there are weaknesses lurking and trouble ahead, as shocks from the slashing of government jobs, new tariffs and federal funding cuts — both threatened and realized — hit the system.
In February, employers added 151,000 jobs on a seasonally adjusted basis; the average monthly gain over the past year has been 162,000. If March’s number comes in below 100,000, it could signal a major slowdown, and would probably reflect the initial effect of those policies.
If Federal Reserve officials feel the labor market is solid, they are likely to hold off on interest rate cuts.
One source of uncertainty is the impact of federal job cuts. In February, the Trump administration fired about 25,000 probationary employees, nearly all of whom have been reinstated in some capacity as the dismissals are challenged in court. It is not clear how these losses will figure in the Labor Department report, which will be based on surveys from the second week of March.
The tariffs announced this week will not be reflected in the March labor data, although those that rolled out earlier in President Trump’s term may be. And even the prospect of tariffs — like the prospect of sweeping changes to the immigration system and a diminished supply of foreign-born labor — has probably already affected business behavior.
Predictions have also been complicated by a disconnect between public anxiety about the jobs market and the reality of labor market indicators. So far, there hasn’t been a clear sign of a surge of unemployment claims or a notable scaling back of private-sector hiring.
“The big challenge, as I see it, is that we have two types of data about the economy that are telling two different stories,” said Michael Strain, an economist at the American Enterprise Institute, a conservative think tank. “The hard data on what consumers, households and businesses actually do has continued to show a very strong economy,” Mr. Strain said, noting no upward trend in layoffs. “But if you look at the sentiment data, it’s completely in the tank.”
The question is whether the gloomy sentiment will translate into reduced consumer spending and take a toll on hiring, Mr. Strain said. (He expects a robust jobs report on Friday.)
On Tuesday, a different set of Labor Department data — a survey of job openings and labor turnover for February — showed a drop in labor market demand, a sign of uncertainty. It also showed the spike in federal layoffs.
From those numbers, and other measures of labor demand and consumer sentiment, Diane Swonk, chief economist at the accounting firm KPMG, offered a more subdued forecast for the March report. There are signs, she said, “that things are starting to seep into the numbers.”