US job growth rebounded sharply in March — as a strike by healthcare workers ended and temperatures warmed up — with nonfarm payrolls increasing by 178,000 and the unemployment rate falling to 4.3%. But the underlying data reveals systemic issues that may trigger a sharp downturn as early as April. Against this backdrop, a recent assessment by US Federal Reserve Chair Jerome Powell has gone viral.
“Effectively, there’s zero net job creation in the private sector. But actually, that looks like that’s about what the economy needs in terms of dealing with very, very low…non-existent, really…growth in the labour force. Which of course we’ve never had in our history. So you’ve got a sort of zero employment growth equilibrium. Now that’s balance,” he said during a press briefing last month.
Data released on Friday appeared to support his assessment.
The unemployment rate fell to 4.3% in March — but only because 396,000 people dropped out of the labour force. And the average workweek shortened from 34.3 hours to 34.2 hours. The Iran war has also triggered a sharp spike in oil prices and sent global markets careening — wiping about $3.2 trillion from the stock market in March. Economists told Reuters that mass deportations by the Trump administration have also contributed to labor market paralysis, by reducing supply, which ultimately hurts demand for goods and services, and workers.
What led the job growth surge in March?
According to the Bureau of Labor Statistics, nonfarm payrolls increased by 178,000 in March after a downwardly revised 133,000 drop in February. March’s employment report likely has no impact on the interest rate outlook, with the effects of supply chain disruptions from the conflict still to work their way through the economy. The odds of a rate cut this year have greatly diminished. The Federal Reserve left its benchmark overnight interest rate in the 3.50% to 3.75% range last month.
The healthcare sector accounted for most of the job gains, adding 76,000 positions, partly reflecting the return to work of 35,000 employees at physicians’ offices following a strike. Employment also increased at hospitals. Warmer weather alo boosted construction employment by 26,000 positions, while transportation and warehousing payrolls increased by 21,000 jobs. Employment in transportation and warehousing is down by 139,000 since reaching a peak in February 2025.
There were further gains in social assistance employment. But federal government employment declined by another 18,000. Since reaching a peak in October 2024, federal government employment is down by 355,000, or 11.8%. There were also job losses in the financial activities sector.