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The US added the most jobs in March since late 2024, allaying fears of a further deterioration in the labour market just as the world’s largest economy faces an energy shock from the Iran war.
Friday’s report from the Bureau of Labor Statistics showed the US created 178,000 jobs last month, far above the 65,000 forecast by economists polled by Bloomberg.
It compared with a loss of 133,000 jobs in February, downwardly revised from an initial estimate for a loss of 92,000.
The education and healthcare sectors powered the rebound, according to the BLS, with manufacturing also creating the most jobs since November 2023. The healthcare sector was hit by strikes in February.
The unemployment rate edged down from 4.4 per cent in February to 4.3 per cent in March.
US bond yields climbed following the report, as traders focused on the stronger than expected March figure and priced in a small chance that the Federal Reserve would raise interest rates this year.
The yield on the two-year Treasury, which is most sensitive to interest rate expectations, edged up 0.05 percentage points to 3.85 per cent.
Fed chair Jay Powell signalled this week that the central bank was in no rush to respond to the energy shock triggered by the conflict.
Investors said that the rebound in jobs last month strengthened the case for the Fed to wait to see whether higher energy prices would become a significant setback for the economy.
Dec Mullarkey, managing director of asset manager SLC Management, said: “None of this changes the Fed’s intent to remain on hold as the broader energy story and potential stagflation risks still play out.”
He added that the “next few [job] prints will pack more information on any stall or speed bumps in hiring [caused by the war in Iran]”.
Economists said recent readings from the BLS had been unusually volatile, making it difficult to judge whether the March figure marked a turning point for a labour market that cooled throughout much of 2025.
Jobs report figures continued “to swing around rather wildly”, cautioned JPMorgan’s Abiel Reinhart.
Omair Sharif, founder of consultancy Inflation Insights, said: “Away from the monthly gyrations, the underlying trends still point to a soft labour market where hiring and firing remain in a holding pattern and wage gains for the bulk of workers have slowed sharply.”
Powell said on Monday that monetary policy was in a “good place” to allow rate-setters to assess the impact of higher oil and gas prices.
Fed officials held interest rates in a 3.5 to 3.75 per cent range last month in their first meeting since the US and Israel started their attacks on Iran at the end of February.
Surging energy prices have prompted traders to ditch bets that the Fed will lower borrowing costs this year. Before the conflict, traders had expected the central bank to deliver between one and two quarter-point cuts this year.
Joe Brusuelas, chief economist at RSM, said the data release vindicated the Fed’s “patient approach.”
“I think that it is appropriate to remain on hold to ascertain the overall impact of the war on price stability and maximum sustainable employment.”
