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The U.S. added just 98,000 jobs last month, according to the Labor Department’s employment report. That was far less than last month's 235,000 and also lower than the official consensus forecast for 180,000 new jobs. It was the smallest increase since May 2016.

An even bigger surprise: The unemployment rate fell to 4.5%, the lowest level since May 2007. It was expected to stay at 4.7% in March. The labor force participation rate stayed at 63%. This rate comes from a survey of households and indicates a sharp increase in employment. Thomas Simons of Jefferies suggests it may be the more accurate report and the establishment survey, from which the payrolls figure is derived, may have been marred by weather effects.

Average hourly earnings grew 02.%, as expected. That's a 2.7% increase from a year ago.

Treasuries initially rallied sharply in response to the weaker-than-expected headline number. The yield on the benchmark 10-year Treasury got as low as 2.27% shortly after the report, the lowest level since mid-March. Treasury rates were already lower following U.S. missile strikes on Syria late Thursday night. By 9:20 a.m., the rate had climbed back to 2.32%, according to Tradeweb. Stock futures, which had been flat, pointed to a lower open after the report.

Ian Lyngen and Aaron Kohli of BMO Capital Markets wrote to clients:

We struggle to imagine this move doesn't have legs and we'll be watching for a test of 2.25% -- note that the 2.27% channel bottom has held. We don't want to go home short over the weekend given the Syria event-risk.

Job gains in both January and February were revised lower, compounding the miss. Peter Boockvar of The Lindsey Group provides multi-year context. He writes:

The 3 month trend of 178k is really not much different than the 187k average seen in 2016 and just confirms the slowing we’ve seen over the past few years. Monthly job gains averaged 226k in 2015 and 250k back in 2014.

He believes job creation was contrained by low supply of workers qualified to fill available jobs. He puts economic growth at around just 1% since the recent job increases aren't enough to boost growth.

But many economists believe the weak number won't be enough to deter the Fed from its plan to hike rates two more times this year. Gus Faucher of PNC writes:

The Federal Open Market Committee is likely to regard the weak March number as an aberration. The next increase in the federal funds rate will come in June, when the FOMC will push the rate up by a quarter of a percentage point to a range of 1.00 to 1.25 percent.

While the lower job creation number indicates slowing growth, economists saw evidence that the number may not be as weak as it seems. The warm weather in February may have pulled forward some construction jobs that normally wouldn't have been added until the March report. Mark Hamrick of Bankrate.com explains:

The goods-producing sector mostly failed to show up in the latest report. Construction employment slowed in March with 6,000 jobs added after nearly 10 times that number reported hired the month before. Weather may have whipped some of these numbers around a bit. Manufacturing hiring also appears to have lost momentum last month.

"It would not be a surprise to see a strong bounce back in April, as well as upward revisions to the March figure," commented National Association of Federally-Insured Credit Unions Chief Economist Curt Long.