US economy added 178,000 jobs in March, well above expectations

The U.S. economy added jobs in March as the labor market rebounded after it unexpectedly shed jobs a month ago.

The Labor Department on Friday reported that employers added 178,000 jobs in March. That figure was well above the expectations of economists polled by LSEG, who predicted a gain of 60,000 jobs.

The unemployment rate declined slightly to 4.3%, which was slightly lower than the 4.4% projected by LSEG economists.

Revisions were made to the payroll numbers for the prior two months, with January’s report revised up by 34,000 jobs from a gain of 126,000 to 160,000; while February’s report was revised down by 41,000 jobs from a loss of 92,000 to 133,000.

Taken together, employment in January and February was 7,000 jobs lower than previously reported.

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Private payrolls grew by 186,000 jobs in March when economists predicted a gain of 70,000 jobs. February’s loss of 86,000 private sector jobs was also revised down to a loss of 129,000.

Government payrolls contracted by 8,000 jobs in March. Job losses by the federal government (-18,000) and state governments (-4,000) were partially offset by local governments adding jobs (+14,000).

The manufacturing sector added 15,000 jobs in March, beating LSEG economists’ expectations that the sector would shed 5,000 jobs for the month. The sector’s loss of 12,000 jobs in February was revised up to a loss of 6,000 jobs.

Healthcare employment grew by 76,400 jobs in March. The sector was led by gains among ambulatory healthcare workers (+54,300), which reflected a gain caused by 35,000 workers in physicians’ offices who returned from a strike. Employment also rose in hospitals (+14,900).

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Construction added 26,000 jobs in March but had shown little net change over the prior 12 months.

Transportation and warehousing added 21,000 jobs, led by gains among couriers and messengers (+20,400). The sector’s employment is down 139,000 from a February 2025 peak.

Social assistance added 13,500 jobs in March, led by a gain in individual and family services (+10,900).

The financial services sector shed 15,000 jobs in March, with the loss coming from finance and insurance (-16,200). The sector is down 77,000 jobs from a peak in May 2025.

The number of long-term unemployed, defined as those who have been jobless for 27 weeks or more, was little changed at 1.8 million in March but is up by 322,000 over the year. The long-term unemployed accounted for 25.4% of all unemployed people in March.

The number of people who were employed part-time for economic reasons was little changed at 4.5 million in March. These individuals would’ve preferred full-time employment but were working part-time because their hours were reduced, or they were unable to find full-time jobs.

The labor force participation rate was 61.9% in March while the employment-population ratio was 59.2%, with both figures having shown little change over the year.

“This year will most likely be a year of shifting labor dynamics as artificial intelligence upends the job market, especially for low-skilled roles. We continue to see healthy job opportunities for workers with experience,” said Jeffrey Roach, chief economist for LPL Financial. 

“Average hourly earnings rose 3.5% from a year ago, giving consumers enough buying power to overcome nagging inflation. This update on the job market gives the Federal Reserve more time to wait for inflation to decelerate before taking action,” Roach added.

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Indeed Hiring Lab director of economic research Laura Ullrich said that while the job gains are “a seemingly welcome plot twist after months of downbeat reports,” she cautioned that the healthcare and social assistance sectors are continuing to do much of the “heavy lifting” and that long-term unemployment is trending up as “sidelined workers struggle to transition into the few sectors that are growing.”

“The broader story of 2026 so far remains one of recalibration rather than acceleration. Slowing population growth, a steep drop in immigration and declining labor force participation mean the economy simply doesn’t need to produce the job gains of prior cycles to keep unemployment stable,” Ullrich said.

The latest jobs data did little to shift the market’s expectation that the Federal Reserve is likely to leave interest rates unchanged for the foreseeable future.

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The CME FedWatch tool shows a 99.5% probability the Fed will leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75% at its April meeting.

It also shows a 78.9% chance that rates will remain at their current level through the Fed’s meeting in December, with a 13.6% probability of a 25 basis point cut by then as opposed to a 6.9% chance of an increase of that size.