The labor market showed modest improvement in March, though underlying trends remain mixed. According to the U.S. Bureau of Labor Statistics’ Employment Situation March 2026 release, the unemployment rate declined to 4.3%, and total nonfarm payroll employment increased by 178,000 jobs, exceeding economists’ expectations following a weaker February. However, revisions to prior months reduced earlier estimates, with January and February job gains collectively adjusted downward, leaving first-quarter growth averaging just over 60,000 jobs per month.

Job growth in March was concentrated in a few sectors, with health care contributing the majority of gains, followed by leisure and hospitality, construction, transportation and warehousing, and manufacturing. The federal government and financial services saw declines during the month. Data from the ADP National Employment Report shows that small businesses drove growth for the second consecutive month while medium and large businesses reported losses.

Additionally, worker mobility has declined, with the quits rate falling to 1.9%, its lowest level since 2020, suggesting that employees are choosing to remain in their current roles amid ongoing uncertainty. Labor force participation also dropped to 61.9%, the lowest level since 2021, reflecting a smaller share of the population participating in the workforce.

Wage growth slowed in March, with average hourly earnings rising 0.2% for the month and 3.5% year over year—both below expectations and marking the lowest annual increase since May 2021.

Overall, while March’s headline job growth exceeded expectations, broader indicators show a labor market with limited momentum. Employers are approaching market uncertainty with more limited hiring and growth plans.