WASHINGTON — U.S. employers added a surprising 228,000 jobs last month, showing that the American labor market was in solid shape as President Donald Trump embarked on a risky trade war with the rest of the world. The unemployment rate ticked up to 4.2%.

The hiring numbers were up from 117,000 in February and were nearly double the 130,000 that economists had expected. Labor Department revisions shaved 48,000 jobs off January and February payrolls.

Workers Average Hourly Earnings Rise

Workers’ average hourly earnings rose 0.3% from February, about what economists had expected. Compared to a year earlier, hourly pay was up 3.8%, a bit lower than the 4% that had been forecast and nearing the 3.5% year-over-year gains that are seen as consistent with the Federal Reserve’s 2% annual inflation target.

Healthcare companies added almost 54,000 jobs and restaurants and bars nearly 30,000 as the job market bounced back from bitter winter weather in January and February. The federal government lost 4,000, a sign that Elon Musk’s purge of the federal workforce may only be starting to show up in the data.

The unemployment rate rose modestly but for what economists consider a good reason: 232,000 people entered the labor force — which means they were either working or looking for work — though not all of them found jobs right away.

Trump was quick to claim victory, posting on his Truth Social platform that the hiring numbers proved that his policies were “already working.” He also said: ”My policies will never change.”

But economists say the jobs numbers provide a rearview mirror look at the economy and worry about damage going forward from his policies, including the sweeping “Liberation Day’’ import taxes he announced Wednesday. Financial markets have been reeling in the face of his trade wars.

Dow Jones Plunged 1,000

The Dow Jones index plunged 1,000 points at the opening bell Friday after China announced retaliatory tariffs against the U.S. That followed a 1,600-point drop on the previous day.

“This could be the high water mark as we go into spring,’’ said Diane Swonk, chief economist at the accounting giant KPMG. Economic uncertainty remains high, she said. “Do the tariffs hold? Does the trade war escalate? How disorderly do markets get? There’s a lot of things in play right now.”

Other economic threats come from Trump’s firings of federal workers and the cancelling of government contracts and his promise to deport millions of immigrants who are working in the United States illegally. In the past several years, those workers have eased labor shortages and helped the economy keep growing. If they’re deported or frightened out of the job market, companies could have to cut back on what they do or increase wages and raise prices, potentially feeding inflation.

The job market has cooled from the red-hot hiring days of 2021-2023. Employers added 117,000 jobs in February and 111,000 in January. Not bad but down from monthly averages of 168,000 last year, 216,000 in 2023, 380,000 in 2022 and a record 603,000 in 2021 as the economy surged back from COVID-19 lockdowns.

“The market needed today’s number,” said Seema Shah, Chief Global Strategist, Principal Asset Management. “Everyone knows that economic weakness is coming, but at least we can be reassured that the labor market was robust coming into this policy-driven shock.”

Fed Raised Benchmark Interest Rate 11 Times in 2022, 2023

In 2022 and 2023, the Fed raised its benchmark interest rate 11 times to combat inflation. Economists expected the higher borrowing costs to tip the United States into recession. But they didn’t. Consumers kept spending, employers kept hiring and the economy kept growing.

Now there are increasing worries about the health of the economy. The University of Michigan’s consumer sentiment survey last month showed that two-thirds of American consumers expected unemployment to rise over the next year — the highest reading in 16 years.

Jorge Marquez, who oversees training and job placement programs as chief impact officer at Goodwill Southern California, said that uncertainty about federal job and spending cuts and Trump’s trade wars has paralyzed hiring for managerial jobs.

Policy, Marquez said, “keeps kind of flip-flopping…. Anything can happen now.’’ But he said that construction and hospitality firms still need entry-level workers. “They can’t bring them on fast enough,’’ said Marquez, who is also chairman of the Los Angeles County Workforce Development Board.

Business Owners Scared About Economic Uncertainty

At Fort Hamilton Distillery in Brooklyn, co-founder Alex Clark would like to add to his staff of 11 full- and part-time workers. But he doesn’t want to risk it with so much uncertainty surrounding economic policy.

“If the world was sailing on an even keel right now, we’d be looking to add bodies,” he said. “But we aren’t getting that vibe.’’

He’s been buying goods in advance to get ahead of Trump’s tariffs – but that means less money for an expanded payroll. He bought a pallet stacker – a mini forklift – “real quick before the tariffs kicked in on China,’’ he said. “We front-loaded some of these purchases to ensure that we have enough in stock … Normally, I wouldn’t be buying a year’s worth of corks (from Mexico). I don’t need a year’s worth of corks. I need three months’ worth of corks.’’

“We’re tying up cashflow now for things we don’t need,’’ he said. “If we don’t, we may or may not have to pay more in the future… The uncertainty is what’s killing us.’’

Jessica Bettencourt is CEO of Klem’s, a third-generation store in Spencer, Massachusetts that sells everything from from lawn and garden items to workwear and gifts, with about 70 workers. She said she’s going to pause hiring as she navigates the barrage of new tariffs. Her items are sourced all over the world, including China and Vietnam.

Suppliers have already notifying her of price increases and Bettencourt expects that pace to accelerate. She sales U.S.-made boots for nearly $400, compared with the $150 versions made outside the U.S.

Prices from vendors may be volatile, Bettencourt said.

“I immediately emailed my staff and asked them to make sure to order more rolls of blank price labels,” she said. “It is going to be a long year.”