Job growth rebounded in March.

A mechanic at work at a garage in Rockville, Md. on Nov. 6, 2025. Employers added 178,000 jobs in March 2026, the Bureau of Labor Statistics reported on April 3, more than economists had expected. The unemployment rate sank to 4.3 percent. (Caroline Gutman/The New York Times)

By LYDIA DePILLIS

The labor market put in a strong showing in March as wintry weather receded, strikes concluded and businesses started looking beyond the huge changes of President Donald Trump’s first year in office.

The Labor Department reported last Friday that employers had added 178,000 jobs last month, substantially more than economists had expected, bringing the average over the past three volatile months to a healthy 68,000 positions. The unemployment rate dropped to 4.3%, leveling off after a gradual rise, as the workforce contracted slightly.

The numbers were collected before the energy price shock caused by the U.S.-Israeli war with Iran tightened its grip on the global economy, however. Forecasters have estimated that persistently higher oil prices will slow job creation and raise unemployment in a year when they had expected the economy to regain some vigor.

“A lot of people thought this was going to be the year that finally we put political uncertainty behind us and the labor market was going to reaccelerate,” said Guy Berger, chief economist at Homebase, a scheduling and payroll platform. “And it’s still too early for gas prices to meaningfully affect the labor market, so maybe this is a ‘what might have been.’”

The job surge in March will most likely give the Federal Reserve some comfort as the central bank tries to balance stubborn inflation with a soft labor market. This is the last employment report before its next meeting at the end of the month.

As has been the case for the past few years, gains were led by health care and social assistance professions, which packed on 90,000 jobs. That number includes 31,000 workers who ended a strike at Kaiser Permanente in California, but even without them, the increase was slightly above the rate at which the sectors have been growing over the past year.

The easing of a stormy, icy winter helped to boost leisure and hospitality employers, which added 44,000 workers. The changing weather may also have propelled construction, which grew by 26,000 jobs. That industry has been surging since last fall, primarily because of the industrial jobs created by the data center boom.

It’s not clear that this pace can continue for much longer. The share of the population that is employed has been dropping and now stands at 59.2%, driven by aging demographics and the Trump administration’s harsh immigration restrictions. As the available workforce contracts, the Federal Reserve Bank of Dallas estimated this week that the break-even rate of jobs needed to absorb new workers could be negative.

“This is a whole new world,” said Laura Ullrich, director of economic research at the job search website Indeed. “The idea that all of a sudden, a report of 50,000 jobs could be a good report, that’s hard to wrap your brain around. Now we’re at zero to 30,000.”

There are other signs of declining dynamism. The hiring rate in February sunk to a low last reached in 2020, when the economy was largely shut down. Surveys by the National Federation of Independent Business have shown that the share of business owners with jobs they can’t fill has been falling, and only 12% plan to add jobs in the next three months.

Consistent with that frozen picture, average hourly earnings grew only 3.5% in March from a year ago, the slowest pace since 2021 and only slightly faster than inflation. That may also be a consequence of shifting composition, as more jobs are added in relatively low-wage social assistance roles and subtracted from higher-paid sectors like financial services and computer systems design.

At the same time, layoffs have remained extremely low, as companies have sought to retain talent rather than let people go only to rehire them later. The average workweek shortened to 34.2 hours, indicating that employers are cutting hours rather than head count. The federal government is a notable exception, having shed a total of 355,000 positions, or 11.8%, since reaching a peak in October 2024.

The March report is a snapshot of the economy before the impact of the war in the Middle East began to be felt in earnest. The resulting spike in gasoline, diesel and fertilizer prices is expected to force consumers to cut back spending on other priorities that employ people, like going out to eat and taking long road trips. Goldman Sachs estimates that the oil price shock will reduce monthly employment growth by 10,000 jobs through 2026.

On top of that, trade uncertainty, persistently high interest rates and immigration enforcement activities have prompted economists to mark up their expectations of a recession next year.

“The labor market has been really resilient, but I don’t know if we’ve seen the combination of everything that’s happening right now,” said Elizabeth Crofoot, an economist at the employment data firm Lightcast. “And I’m not sure how much further we can hold on.”