By Matt Grossman
U.S. job growth blew past expectations last month, a resilient rebound that defied concerns about a pending downturn.
The numbers
The U.S. added 178,000 jobs in March, the Labor Department said Friday, the best month for job growth in more than a year.
It was far better than February, when the U.S. lost jobs.
The March numbers also beat the gain of 59,000 jobs that economists polled by The Wall Street Journal had expected to see.
The unemployment rate
The unemployment rate fell to 4.3%, from February's 4.4%
The decline in the unemployment rate came with an asterisk: The labor force shrank by nearly 400,000 people, meaning fewer Americans were counted as unemployed. The share of Americans working or looking for work slipped to 61.9%, its lowest level since the fall of 2021.
"We should all be rooting for a higher participation rate," said Henry McVey, head of global macro and asset allocation at private-equity firm KKR. "You're in a solid, but not spectacular, growth environment."
Whiplash from month to month
The February jobs number, meanwhile, was worse than previously reported. The Labor Department said that the economy lost 133,000 jobs in February, after previously estimating a loss of 92,000 jobs.
"I always tell people to look not just at the latest month, but to ask, what's been the picture for the past three or four months?" said Gus Faucher, chief economist at PNC Financial Services. "When you look at the broader picture, we're adding jobs at a slower pace than a couple years ago, but we are adding jobs, and it's enough to keep the unemployment rate steady."
All told, the economy has created an average of 15,000 jobs each month over the past half year. That is a big downshift from the same period a year earlier, when the U.S. was adding 78,000 jobs on average each month.
The U.S. has lost jobs in five of the past 12 months.
The industries that grew and declined
The job gains were driven by a big rebound for the healthcare and social-assistance sector, the pillar that has held up the labor market for much of the past year. It added about 90,000 jobs in March.
That was a reversal from February, when a large West Coast strike sidelined tens of thousands of workers.
The rebound in jobs also looked as if it reflected an improvement in the weather from February, noted Jefferies economist Thomas Simons. That helped the leisure and hospitality and construction sectors.
Leisure and hospitality added 44,000 jobs. Construction added 26,000.
Manufacturing employment rose by 15,000.
One of the few weak spots was the public sector. Federal-government payrolls lost 18,000 jobs, more than offsetting net hiring by local agencies.
The context
Hiring has weathered a complicated set of crosscurrents over the past year. Job growth has downshifted, but Friday's data confirms that the labor market hasn't been derailed.
Job gains have slowed significantly since earlier in the 2020s, cooling alongside softer overall economic growth. Last year, uncertainty about big changes to trade, immigration and tax policy put many companies into hold-steady mode, delaying big hiring and layoff decisions until the picture becomes clearer.
At the same time, the Trump administration's immigration crackdown has reduced the number of available workers. So the economy no longer needs to add as many new jobs to keep the same share of workers employed.
The war in Iran means the economy is now facing a new set of challenges -- and most economists think that the March jobs data comes too early to see the effects. The sharp rise in oil prices raises costs and could yield more inflation, but it could also strain household budgets and drag down demand, which might threaten hiring.
Because hiring plans are often made months in advance, the March numbers probably don't give a clear read on how these effects will play out.
What this means for the Fed
Federal Reserve Chair Jerome Powell said this week that the Iran war raises the risk that the central bank may have to choose between fighting inflation and shoring up the labor market but that it isn't facing that trade-off yet. Friday's data rammed that point home.
The Fed was already going to hold rates steady at its coming April 28-29 meeting -- Powell's last before his term as chair ends -- because elevated oil prices and underlying inflation around 3% had closed the door to cuts regardless.
But the March jobs data relieves officials of the harder question looming behind that decision: whether a weakening labor market would eventually force them to consider cutting even with inflation uncomfortably high. For now, that trade-off remains hypothetical. The report could also give the Fed's officials latitude to back away from the implicit signal that its next move is more likely to be a rate cut.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
April 03, 2026 11:00 ET (15:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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