The U.S. economy added more jobs than expected in March, official data showed Friday, offering some relief after a weak February report, though slowing wage growth and fragile labour-force participation pointed to a still-soft labour market.
Nonfarm payrolls increased by 178,000 last month, rebounding from a revised 133,000 decline in February, the U.S. Bureau of Labor Statistics said. The unemployment rate held broadly steady at 4.3 percent, while job gains were concentrated in health care, construction and transportation and warehousing.
The figures came in well above market expectations and suggest the labour market remains resilient despite signs of broader economic slowing and uncertainty linked to high energy prices and geopolitical tensions.
Still, the report also highlighted underlying weakness. The labour force participation rate was unchanged at 61.9 percent, while the employment-population ratio held at 59.2 percent, indicating that hiring momentum remains subdued by historical standards. The number of people marginally attached to the labour force rose to 1.9 million, and discouraged workers increased to 510,000.
Health care once again led job creation, adding 76,000 positions in March. Much of that increase reflected the return of workers after strike-related disruptions, with ambulatory health care services accounting for 54,000 jobs, including 35,000 in physicians’ offices. Hospitals added another 15,000 jobs. Construction employment rose by 26,000, while transportation and warehousing added 21,000, driven largely by gains in couriers and messengers.
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By contrast, federal government employment continued to contract, falling by 18,000 positions in March, extending a downward trend. Employment in financial activities also remained under pressure, underscoring uneven hiring across sectors.
Economists said the data painted a mixed picture: stronger than feared at the headline level, but still consistent with a labour market that has cooled significantly over the past year.
“March was somewhat encouraging, but it’s been a rocky year for the labour market,” analysts said, noting that hiring has slowed sharply compared with the rapid post-pandemic expansion. Payroll employment, the BLS said, has “changed little on net over the prior 12 months.”
Wage growth also eased, a sign that inflationary pressure from labour costs may be moderating. Average hourly earnings rose just 0.2 percent on the month and 3.5 percent from a year earlier, the slowest annual increase since May 2021, according to the BLS. The average workweek edged down to 34.2 hours, suggesting employers remain cautious even as they continue to add staff.
For financial markets and policymakers, the report is unlikely to force an immediate shift in expectations for U.S. interest rates. The Federal Reserve has been watching employment data closely as it balances signs of softer growth against still-elevated inflation, which has been complicated further by the recent surge in oil prices tied to the Middle East conflict.
The stronger-than-expected payroll number may support the case for patience at the central bank, particularly as wage growth cools and unemployment remains relatively low. But the broader trend suggests the labour market is no longer providing the same powerful engine for growth it did in previous years.
The March report also comes at a time when economists say the U.S. economy needs fewer monthly job gains than in the past to keep the unemployment rate stable, reflecting slower labour-force growth and demographic changes.
For now, the latest data suggest the U.S. labour market is still expanding — but without much vigour. That may be enough to reassure policymakers in the short term, though not enough to dispel concerns that hiring, consumer demand and business confidence could weaken further in the months ahead.
