American employers added 178,000 jobs in March, rebounding from a February decline, and the unemployment rate dipped to 4.3%, according to the U.S. Labor Department’s monthly jobs report released April 3. The report’s payroll increase marked a turnaround from February’s job losses, with Labor Department data showing fewer Americans competing for work than in February.
The unemployment rate fell partly because the labor force shrank. The Labor Department said the labor force—people working or looking for work—dropped by 396,000 in March, pushing the labor force participation rate to 61.9%, its lowest level since November 2021.
The payroll gain followed a weak start earlier in the year. The Labor Department reported that hiring in March reversed the loss of 133,000 jobs in February, and it also made revisions that, in combined January and February payrolls, shaved 7,000 jobs from the earlier totals. The report also showed average hourly wages rose 0.2% from February and were up 3.5% compared with March 2025, the smallest year-over-year gain since May 2021.
Job growth was concentrated in specific sectors. Health care and social assistance employers added 76,400 jobs in March, boosted by the return of 31,000 Kaiser Permanente employees to work after an end to a strike in February. Construction companies added 26,000 jobs, which economists said may have reflected warmer weather, while factories added 15,000 jobs but have still shed jobs for 14 of the last 16 months.
Economists cautioned that the stronger headline numbers may not fully reflect shifting conditions tied to the war with Iran and energy prices. Thomas Simons, chief U.S. economist with Jefferies, said the data are “mostly backward-looking” and likely do not incorporate the impact from a recent rise in energy prices or other risks related to the war in Iran.
Diane Swonk, chief economist at KPMG, said the economy has received a lift from large tax refunds made possible by President Donald Trump’s 2025 tax cuts, but she added that those benefits were being absorbed by higher energy costs. Stephen Brown of Capital Economics said the larger-than-expected rebound in nonfarm payrolls mainly reflected reversals of strike and weather effects that weighed on hiring in February rather than evidence of rapid labor-market momentum.
Brown also warned that higher oil prices could affect consumer purchasing power and, in turn, demand and hiring. Olu Sonola of Fitch Ratings said firms typically respond to uncertainty by holding back on hiring decisions, and he pointed to how much depends on how long the conflict lasts and what happens to oil prices. The report noted that benchmark American crude oil closed just below $112 a barrel on Thursday and that Sonola warned of the uncertainty if oil prices rose sharply further.
The uncertainty is affecting individual businesses planning to hire ahead of the holidays. Mai Truong, founder of Bo & Mei, a Brooklyn, New York-based maker of games and puzzles designed to celebrate Asian heritage, said she was preparing for holiday shopping season and assessing her hiring plans while navigating tariffs and higher costs, including higher shipping expenses tied to the Iran war. Truong, who said her company has one full-time employee and typically relies on contractors for seasonal work, said, “It makes everything feel very uncertain,” adding, “On the other hand, there’s so little you can do with the volatility.”
In the broader policy backdrop, economists said March’s unexpectedly strong hiring could give the Federal Reserve more time to assess the impact of higher energy prices on inflation before cutting interest rates immediately. As investors and households digest the mixed message—strong payroll growth against a backdrop of uncertainty—labor-market watchers said future job gains may depend on how energy prices evolve and whether the war’s effects deepen.