Jobs rebound in March, unemployment at 4.3%

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• Key insight: Payrolls increased modestly in March, adding 178,000 new hires
• Supporting data: The unemployment rate held steady at 4.3%.
• Forward look: Concentrated hiring in certain sectors, with simultaneous layoffs in others, could test the Fed’s patience on rate cuts.

U.S. job growth rebounded in March, with nonfarm payrolls rising by 178,000 after a February decline, while the unemployment rate was at 4.3%, according to a report by the Bureau of Labor Statistics released Friday.

The results suggest some hopeful signs for the economy even as that stability was unevenly distributed. Gains were concentrated in a handful of sectors and federal employment continued to contract. Employers added 130,000 jobs in January and the economy lost 92,000 jobs the following month.

“March’s report showed stronger gains than anticipated,” said Ger Doyle, North America regional president at ManpowerGroup, “offering an early signal that employers may be moving ahead with hiring plans more decisively than earlier in the quarter.” 

The health-care sector added 76,000 jobs, including a 35,000 increase in doctors’ offices as health-care workers ended a strike. Construction, which added 26,000 jobs, and transportation and warehousing, which added 21,000, also demonstrated gains, “reflecting a gain in couriers and messengers,” according to BLS. Social assistance added 14,000 jobs.

Outside those pockets, hiring was less widespread. The financial sector lost 15,000 jobs, and federal-government employment fell by 18,000, continuing a sharp decline since the fall of 2024. 

“Since reaching a peak in October 2024, federal government employment is down by 355,000, or 11.8%,” the BLS report stated. “Federal employees on furlough during the partial government shutdown were counted as employed in the establishment survey because they worked or received (or will receive) pay for the pay period that included the 12th of the month.”

Most other major industries, including manufacturing, retail and professional services, were flat with last month.

The number of unemployed and the unemployment rate held at 7.2 million and 4.3%, respectively. Labor-force participation and the employment-population ratio were unchanged at roughly 60% each. Long-term unemployment creeped higher on a yearly basis to 1.8 million, representing a quarter of all unemployed workers.

The number of workers employed part time for economic reasons stayed high, at 4.5 million. Job-seeker sentiment was particularly dismal, with the number of discouraged workers, or those “who believed that no jobs were available for them,” increasing by 144,000 to hit a total of 510,000.

The Federal Reserve is mulling these mixed results as it considers whether to cut rates this year. The Federal Open Market Committee held rates steady last month with Federal Reserve Chair Jerome Powell saying  rate cuts would depend on signs of progress toward the Fed’s 2% inflation target rate. Powell also said the economic effects of the war in the Middle East were continuing to push inflation higher over the short term, but that the longer term outlook was unclear.

“The thing I really want to emphasize [is], nobody knows,” Powell said at a press conference in March. “The economic effects could be bigger. They could be smaller. We just don’t know.”