Unemployment rate is expected to hold at close to 4%, as most federal job cuts are not yet showing up

Trade wars with Canada and other countries threaten to cause pain in the U.S. economy in the short run.

Escalating trade tensions have fostered anxiety among U.S. households and businesses. Now the March jobs report could shed light on how much President Donald Trump’s tariffs were weighing on the economy even before he launched his latest wide-ranging taxes on imports on Wednesday.

Here’s what to watch for in the March employment survey, due Friday morning.

How many new jobs?

The U.S. likely added a modest 140,000 new jobs last month, economists polled by the Wall Street Journal estimate. Employment rose by 151,000 in February.

Estimates range far and wide, however, because of two wild cards: Trump administration tariffs and White House efforts to slash the size of the federal workforce.

Business leaders say they are hesitant to hire and invest because of the tariffs. That could have dented hiring in March.

But warmer weather last month may have padded payrolls, and a separate survey by payroll processor ADP showed a decent rebound in hiring.

The economy needs to create an average of 100,000 to 150,000 new jobs a month to keep the unemployment rate low and stable, economists say. Yet job creation could take a big hit if stiff tariffs are kept in place for an extended period.

Unemployment rate

If job creation tops 100,000 as forecast, the unemployment rate is sure to hold at close to its current 4.1% rate.

What has helped keep the rate low is a reluctance among businesses to lay off workers in light of a chronic labor shortage — a shortage that could get worse because of the crackdown on immigration.

The U.S. population is aging and the birth rate is shrinking, economists point out, narrowing the pool of potential workers. That’s partly why layoffs remain near a historic low even though hiring has slowed since last year.

Government workers

Government was one of three sectors last year that generated the most new jobs, with the others being healthcare and leisure and hospitality.

Don’t expect a repeat this year, as the Trump administration aims to sharply reduce the size of the federal workforce.

Even so, the government has run into legal roadblocks in slashing federal jobs, and it may take months before the job losses show up in official reports. Weekly jobless claims have not reflected a big increase in federal unemployment so far.

What’s more, states, cities and towns have produced the majority of new government jobs in the past few years. Local hiring could more than offset federal employment cuts in March.

Spring fever

A severe cold snap in January and early February depressed employment in businesses more sensitive to the weather such as construction, retail and leisure and hospitality.

Employment in leisure and hospitality — think hotels and restaurants — has fallen for two months in a row for the first time since the start of the pandemic in 2020.

Economists expect a rebound in employment in those areas in March, potentially leading to a bigger total gain in U.S. jobs than Wall Street has forecast.

Worker pay

Hourly pay is expected to rise 0.3% in March, putting the total increase over the past year at close to 4%.

Federal Reserve Chair Jerome Powell insists labor costs have not been a big contributor to inflation, but they could become so if they don’t slow somewhat further.

Wages rose about 2% to 3% a year in the decade before the pandemic.