The U.S. labor market showed signs of life in March, as restaurants, factories and hospitals all added workers, despite economic jitters tied to the war with Iran.
A report from the Labor Department Friday shows employers added 178,000 jobs last month — much more than forecasters had expected — and reversing big job losses in February.
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The unemployment rate dipped to 4.3% in March from 4.4% the previous month, although that was largely because almost 400,000 people dropped out of the workforce.
Overall, the labor market has been in a holding pattern for much of the last six months, with employers reluctant to add many people to their payrolls but also hesitant to lay people off. The early months of 2026 paint a mixed picture, with solid job gains in January followed by significant cuts in February and now a rebound in March.
The size of the labor force has also been stagnant, as a result of the Trump administration's immigration crackdown and the large number of baby boomers who are retiring. The share of adults who are working or looking for work dipped slightly in March.
A survey of business economists released this week showed concern that the war with Iran would lead to slower economic growth and higher unemployment. The war has triggered a sharp jump in energy prices, with the average price of gasoline topping $4 a gallon for the first time since 2022.
The monthly jobs tally was conducted in the first half of March, so may not fully reflect the economic fallout from the war. Despite sharply higher prices for crude oil, the report shows no increase in employment among oil and gas drilling companies.
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Some sectors that added or lost jobs
Health care was once again the leader in job growth last month, adding 76,000 jobs. About half that total reflects people returning to work after a health care strike in California and Hawaii the month before.
Construction companies added 26,000 jobs in March, taking advantage of mild spring weather. The federal government continued to shed workers, cutting 18,000 jobs last month.
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