The pace of expansion in the U.S. labor market exceeded forecasts last month, dampening investor hopes for potential interest rate cuts by the Federal Reserve.

U.S. employers added 303,000 nonfarm payrolls in March, marking an increase from the 270,000 reading in February and surpassing the expected 212,000, the Bureau of Labor Statistics said Friday.

March’s Jobs Report: Key Highlights

Monthly nonfarm payrolls grew by 303,000, representing an increase of 33,000 from the previous month and marking the highest figure since May 2023. This topped economist expectations for an increase of 212,000.

The unemployment rate slowed from 3.9% to 3.8%, easing more than expected.

Average hourly earnings eased from 4.3% to 4.1%, in line with predictions.

On a monthly basis, pay growth accelerated from the upwardly revised 0.2% to 0.3%, matching expectations.

Market Reactions

The unexpectedly strong jobs report intensified dwindling expectations for Federal Reserve rate cuts, a sentiment already weakened by hawkish remarks from Fed speakers on Thursday.

Prior to the March jobs data, market-implied probabilities assigned a 64% chance of a rate cut by June, but this figure may undergo some downward adjustment in light of the robust employment report.

The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF , rose 0.4% minutes after the release, and Treasury yields moved higher.

Futures on U.S. major averages trended higher during premarket trading on Friday following a negative session on Thursday. The tech-heavy Invesco QQQ Trust closed 1.5% a day earlier, marking the worst-performing day since late January.