The US economy added a higher-than-expected 178,000 jobs last month
By Alicia Wallace, CNN
(CNN) — The US economy added 178,000 jobs in March, a signal that businesses were moving forward with hiring plans before the war with Iran escalated.
The unemployment rate eased to 4.3% from 4.4%, according to new data released Friday by the Bureau of Labor Statistics.
Friday’s jobs report far exceeded expectations – economists forecast businesses would add 60,000 jobs last month and the unemployment rate would stay at 4.4% – and last month’s employment gains were the strongest since December 2024.
March’s 178,000-job gain follows a downwardly revised 133,000-job loss in February and a 160,000-job gain in January. Taken together, monthly job growth is averaging just above 68,000 so far this year, an improvement from 2025, when a mere 12,000 jobs were added per month.
Economists were thinking that the March report could be somewhat of a palate-cleanser after two months of wild swings in employment data (thanks in part to factors such as weather, seasonal hiring, strikes and methodological recalibration).
The return of workers who had been on strike (32,000 of them from Kaiser Permanente and Starbucks) helped lift March’s employment gains, as likely did more favorable weather (construction added 26,000 jobs after shedding 13,000 the month before).
Health care and social assistance resumed its workhorse status, adding 89,900 roles last month.
Health care, a sector buoyed by the rising demand from an aging population, continues to drive overall employment gains; however, job growth in March was some of the broadest seen in years.
The “diffusion index,” which provides a measurement of job growth across major labor market industries, jumped to 56.8 in March from 49.2 (a number over 50 indicates more industries are adding jobs than losing them).
It’s the highest reading for the index since December 2023.
“March’s jobs report shows the job market picking itself back up after a stumble in February,” Daniel Zhao, chief economist at Glassdoor, wrote Friday. “Hiring bounced back more strongly than expected, easing worries that the labor market was starting to weaken more seriously.”
Looming uncertainty
Friday’s jobs report is one of the first major economic data releases since the start of the US-Israeli war with Iran.
The escalating conflict in the Middle East wasn’t expected to affect March’s employment numbers; however, economists caution that the health of the US labor market and broader economy hinge on the scope and duration of the war.
The conflict, which looks set to stretch into its sixth week, and the resulting supply crunch from a choked-off Strait of Hormuz, are delivering shockwaves throughout the globe.
Americans immediately saw an increase in prices at the pump; businesses watched transportation costs skip higher; and fears have heightened that the war’s fallout could quickly metastasize throughout the economy.
Sharply rising oil prices and sudden shortages of critical materials such as fertilizer can quickly permeate an economy and cause all kinds of goods and services to increase in price while sapping precious household income.
“The question now is how much blowback will come from the war in Iran and the associated uncertainty around energy prices,” Olu Sonola, head of US economics for Fitch Ratings, wrote in a note to investors. “Since May 2025, each month of positive job growth has been followed by a month of negative growth, a pattern that likely reflects the tariff uncertainty that began in April.”
“The war in Iran now threatens to add to that choppiness, especially if the conflict drags on and the uncertainty impulse intensifies,” he added.
This story is developing and will be updated.
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