The US economy has roared into the second quarter, as job gains once again smashed expectations in the face of the Federal Reserve's high interest rates.
US employers added 303,000 jobs in March, up from a downwardly revised 270,000 job gains the previous month, the Labour Department reported on Friday.
A survey of economists polled by FactSet estimated the US added 200,000 jobs last month.
“There is no sign of any momentum being lost,” Mahmoud Alkudsi, senior market analyst at ADSS, wrote in a note to clients.
“The US dollar is expected to strengthen following a robust job report, leading to decreased likelihood of an interest rate cut by the [Federal Reserve] in June.”
The nation's unemployment rate dropped to 3.8 per cent, down slightly from February's 3.9 per cent. It has remained under 4 per cent for the past 26 months.
The labour force participation rate, which measures the percentage of people either actively working or looking for a job, increased slightly to 62.7 per cent.
Federal Reserve chairman Jerome Powell has said recent immigration flows and rising participation among 25 to 54-year-olds have helped to strengthen the labour supply.
Average hourly earnings increased 0.3 per cent last month. They slowed on an annual basis from 4.3 per cent to 4.1 per cent, although this is still above the rate of inflation.
A separate report from the Labour Department this week also showed the jobs market remains strong.
The Job Openings and Labour Turnover Survey showed there were 8.76 million vacancies at the end of February, almost unchanged from January.
Friday's report followed surprising gains posted in February, when the US economy added 275,000 jobs.
That, along with hotter-than-expected readings that showed inflation moving sideways, have led Federal Reserve officials to consider the timing of cutting US interest rates.
"We have seen a great deal of progress on inflation since we last raised the federal funds rate back in July. of last year, but that progress has stalled," Fed governor Michelle Bowman said at the Manhattan Institute on Friday.
With rates steady between the range of 5.25 per cent to 5.50 per cent since July, Fed officials consider themselves to be in a wait-and-see mode with respect to dialling back on their restrictive policy.
"We are still not yet at the point where it is appropriate to lower the policy rate, and I continue to see a number of upside risks to inflation," Ms Bowman said.
Following the Fed's lead, a handful of central banks in Gul Co-operation Council countries have also kept their interest rates steady since the summer.
The US central bank believes it can afford to be patient and for now has warned of the risks of cutting rates too soon or holding them for too long.
“It is too soon to say whether the recent readings represent more than just a bump,” Mr Powell said during an address at Stanford University's Graduate School of Business on Tuesday.
Friday's report was not expected to hold major influence for the Fed's decision next month, when interest rates are expected to remain unchanged.
A majority of traders instead expect the Fed to issue the first rate cut of this cycle in June, data from the CME Group indicated.
Wells Fargo, which expects the Fed to cut rates by 100 basis points this year, said Friday's report does not change its baseline scenario. The bank said it would update its outlook after next week's inflation report.
“But based on what we know now, the strength of the labour market suggests the FOMC [Federal Open Market Committee] can continue to await further improvement on the inflation front before easing policy,” senior economists Sarah House and Michael Pugliese wrote in a note to clients.
The Federal Open Market Committee holds its next two-day policy meeting on April 30.
