Dive Brief:
- Unemployment dipped to 4.3% last month and U.S. payrolls rebounded with an unexpected gain of 178,000 jobs, the Bureau of Labor Statistics said Friday, yet a revision in total jobs lost in February from 92,000 to 133,000 highlighted violent swings in the labor market in recent months.
- The return to work by 35,000 striking health care workers and a seasonal, 44,000 increase in leisure and hospitality jobs accounted for much of the payroll gain in March. Average hourly earnings rose just 0.2%, reducing the year-over-year growth rate to 3.5%, the slowest pace since May 2021.
- “The March slowdown strengthens the case for thinking the labor market is loose enough for employers to have the upper hand in wage bargaining,” Pantheon Macroeconomics Chief U.S. Economist Samuel Tombs said, referring to muted wage gains. “Forward-looking indicators suggest growth in payrolls will remain subdued,” Tombs said in a note, predicting that coming revisions of payroll data “likely will reveal a weaker picture.”
Dive Insight:
Several unusual forces are currently jolting the labor market and prompting companies to take a low-hire, low-fire approach to headcount.
Efforts by President Donald Trump to enforce immigration law have reduced the supply of labor. Some companies are swapping in artificial intelligence for employees in routine tasks. And the highest U.S. tariffs in decades have blurred the business outlook during the past year.
More recently, a surge in energy prices and surge in borrowing costs since the start of the Iran war on Feb. 28 further confounds C-suite planning for staffing and other essentials.
“The labor market has cooled gradually over the past 18 months,” St. Louis Fed President Alberto Musalem said Wednesday, noting that “monthly payroll growth has been choppy, clouded by strikes and weather.”
“I perceive labor market risks as weighted to the downside,” he said in a speech.
“The three-month rates of total and private payroll growth have been narrowly concentrated in just a few sectors, and have been at the low end of estimates of the so-called breakeven rate needed to prevent the unemployment rate from rising,” Musalem said.
“With the pace of hiring already low, an increase in layoffs could lead to a rapid increase in the unemployment rate,” he said.
Health care companies added a total of 76,000 jobs in March for an average monthly gain of 29,000 during the past year, the Bureau of Labor Statistics said.
Transportation and warehousing companies increased staff by 21,000 with the hiring of 20,000 workers as couriers and messengers, the bureau said. The companies have cut payrolls by 139,000 since reaching a peak in February 2025.
