U.S. jobs report shows 178,000 workers were hired in March. But the hiring boomlet is unlikely to last.

MW U.S. jobs report shows 178,000 workers were hired in March. But the hiring boomlet is unlikely to last.

By Jeffry Bartash

Unemployment rate falls to 4.3% from 4.4%

The U.S. added a greater-than-expected 178,000 jobs in March and the unemployment rate fell a tick to 4.3% - signs that the labor market is holding firm even as the economy undergoes another spasm of uncertainty tied to the Iran war.

The increase in employment March, the biggest in 15 months, was padded by the return of 31,000 striking nurses. Better weather last month may have also helped.

The seemingly strong jobs report - it's not as good as it looks under the hood - is likely to keep the Federal Reserve on the sidelines. The central bank stopped cutting interest rates in December, and its next move is unclear.

The U.S. stock market DJIA SPX was closed for the Good Friday holiday. Bond yields BX:TMUBMUSD10Y rose slightly after the jobs report.

The surge in hiring is unlikely to last, economists say. The war in Iran has added fresh uncertainty and could make businesses more hesitant to hire. The effects of the war will probably be felt more in the April employment report.

Still, the rebound in hiring in March suggests the labor market is in decent, if not great, condition.

The economy added 68,000 jobs a month from January to March, reversing a decline in employment at the end of last year. Economists rely on the three-month average to glean recent hiring trends.

The pace of hiring is much slower compared with a few years ago, however, and it's also quite choppy. The economy has alternated between adding workers and shedding them for 11 months in a row.

That's not necessarily a bad thing, though. The working-age population in the U.S. is growing more slowly than ever, so the economy doesn't need to add as many jobs as it once did to keep unemployment low.

Economists estimate the U.S. needs to add no more than 50,000 jobs a month to maintain a healthy labor market - and a new Fed study says it might not need to add any at all.

The unemployment rate, meanwhile, has ranged from 4% to 4.5% for the past year and a half.

A stable unemployment rate has eased the worries of top officials at the Fed. They cut a key U.S. interest rate three times late last year to make sure the labor market didn't get any worse.

Now Fed officials are more worried about inflation, particularly after a spike in oil prices stemming from the conflict in Iran. The Fed is not expected to cut rates again anytime soon.

The only way that would change is if the economy sputtered and layoffs begin to surge, analysts say. So far there's no sign of that.

Key details: The healthcare industry added 76,000 jobs, but 40% of those were simply nurses returning from strike.

Construction companies hired 26,000 workers in March as the weather improved, but employment was basically flat over the past year.

Employment fell in the federal government and the financial sector. Most other industries reported little change in the number of employees.

Wage growth continued to slow in a sign of slack demand for labor. The increase in hourly pay in the 12 months that ended in March slowed to 3.5% from 3.6%, marking the smallest yearly increase since 2021.

Another sign of labor-market slack is the falling number of people looking for work. Almost 400,000 people dropped out of the labor force in March, and a similar number reported being newly unemployed.

A shrinking labor force largely explains the drop in the unemployment rate in March, but that's not a positive trend.

Big picture: The unemployment rate is the best gauge of the labor market's health, given slow or no population growth. And what it shows is that the economy is doing all right, for now.

The economy is unlikely to improve much, however, until the conflict with Iran is resolved and oil prices drop.

Looking ahead: "This is a great Friday for the labor market, with a decisively lower unemployment rate and a bumper headline payroll number," said Olu Sonola, head of U.S. economics at Fitch Ratings.

"The question now is how much blowback will come from the war in Iran and the associated uncertainty around energy prices. For the Fed, wait-and-see is the only sensible option at this point."

Market reaction: Treasury yields rose after the employment report on the assumption a stronger labor market could discourage the Fed from cutting interest rates. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was up 4 basis points at 4.35%.

Dow Jones Industrial Average DJIA futures initially rallied on the data but had already turned lower in recent trading, FactSet data showed.

-Jeffry Bartash

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April 03, 2026 09:40 ET (13:40 GMT)

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