America created 303,000 jobs in March - smashing expectations in boost to economy… but what does it mean for your 401(K)?

The US economy added 303,000 jobs in March, significantly higher than economist expectations of 200,000.

It was also higher than the 270,000 gain in February, signaling that a cut to record-high interest rates of 5.25 to 5.5 percent may be further off than expected.

The unemployment rate fell 0.1 percent to 3.8 percent, according to the government's March employment report.

Job gains occurred predominantly in healthcare, government and construction. Manufacturing employment was unchanged after a downward revision to a loss of 10,000 jobs the month before.

The US economy added 303,000 jobs in March, significantly higher than expectations

The unemployment rate fell 0.1 percent to 3.8 percent in March but wage inflation was down

The major boost to employment caused Wall Street to push back its expectation of when rates are likely to be cut. 

It also reduced its estimation of the likelihood that there would be three rate cuts this year from 97 percent to 92 percent. 

'This report may do little to ease investors' concern about the Fed further delaying rate cuts,' said Bret Kenwell, US Investment Analyst at eToro.

Wall Street closely watches the US Bureau of Labor Statistics' monthly figures. It doesn't want unemployment to increase but it also doesn't want too many new jobs created as that can be an indicator that inflation will rise.

If the Federal Reserve thinks inflation is still hot, it will slow down plans to cut interest rates. That has a knock-on effect on the stock market.

Higher rates are seen as negative to big companies, as it makes it more expensive for them to borrow money to invest - plus it also cuts consumer spending.

That can push stock prices down, which hits 401(K)s.

More than an hour after the report, both the S&P 500 and tech-heavy Nasdaq were slightly up - by 0.5 and 0.7 percent respectively.

David Waddell, CEO and chief investment strategist at Waddell & Associates, told Reuters markets were able to digest the high number of jobs added because wages were down slightly.

Jobs were also up in the healthcare sector. Pictured is a health worker administering a vaccine

Many of the jobs added were in construction. Pictured is an iron worker in Reseda, California

Wage growth remained above inflation, with hourly earnings up 4.1 percent from a year ago, but down from 4.3 percent last month.

'The meaningful data point... is average hourly earnings, which have now fallen down to 4.1 percent year-over-year, which is the lowest level since June of 2021,' said Waddell.

'So the employment report was hot, but it was a cooling inflation report and that's why the market can digest it... this doesn't really change anything,' he added.

The Fed has an inflation target of 2 percent, and that generally corresponds to wage growth of 3 to 3.5 percent.