The US jobs market experienced an unexpected surge in March, with employers adding 178,000 jobs, according to the Labor Department — the unemployment rate dipped to 4.3%, signaling resilience in the labor market despite ongoing tensions from the US-Israel war in Iran.

Resilience Amid Uncertainty

Analysts attributed the gains to the end of strikes in the health care industry, which had caused steep job losses in February — the figures are likely to boost confidence in the job market, which has slowed significantly over the last year. The strong performance may also reinforce the case for the Federal Reserve to hold off on cutting interest rates, as it monitors the impact of rising oil prices on the economy.

US President Donald Trump has pushed the Federal Reserve to lower borrowing costs aggressively, a move that would provide an economic boost — However, the Fed has been cautious in recent months, citing concerns about inflation, which remains above its 2% target. Fed Chair Jerome Powell has described the economy as being in a delicate balance, with muted job creation but also relatively limited job cuts.

Policy Impact on the Job Market

The White House crackdown on immigration and other policy changes, such as tariffs, have contributed to the static job market — the war in Iran could add to that dynamic, though it remains too soon to fully gauge its impact. The Labor Department typically surveys employers and households around the middle of the month, which was only a few weeks after the conflict had started.

Economists have warned that a sustained rise in oil prices could push up transport and food costs, prompting households and businesses to cut back on spending in other areas and leading to a wider economic slowdown. Olu Sonola. Head of US economics at Fitch Ratings, said, ‘The question now is how much blowback will come from the war in Iran and the associated uncertainty around energy prices.’.

The Labor Department report showed job gains in March were driven by the health care industry, but extended into other sectors, including construction and manufacturing, though Financial firms and those in the information sector, which includes film, publishing, and tech, posted losses, as did the government.

Revisions Highlight Job Market Volatility

Additional data from the US Bureau of Labor Statistics revealed that job gains in March were 178,000, far exceeding economists’ expectations of about 70,000. The unemployment rate fell to 4.3%. In February, the economy lost 133,000 jobs, according to revised figures; Job figures for January were revised up, from 126,000 to 160,000 — With revisions, total employment in January and February is 7,000 lower than previously reported.

Previous data painted a mixed picture of the US labor market, which economists say has been in a static ‘low-fire, low-hire’ state, where both layoffs and new hires are down. Outplacement firm Challenger, Gray & Christmas found that employers announced 217,362 job cuts in the first quarter of 2026 – the lowest total for that period since 2022. But hiring in February slowed to a six-year low, according to data released earlier this week, with dips seen in construction and leisure and hospitality.

The so-called ‘quits rate’ fell to 1.9%, the lowest since 2020, suggesting that uncertainty in the labor market has prompted more workers to stay put at their jobs. The trend follows sluggish overall growth in the US jobs market since last year. In 2025, just 116,000 jobs were added to the economy for the entire year – around the same number that was added per month in previous years.

The slowdown points to caution among employers, particularly as consumer inflation experienced whiplash over the last year. US inflation dipped down to 2.3% in April 2025 before jumping to 3% in September. Price increases have been steady at 2.4% since the start of this year, though the US-Israel war with Iran is expected to drive inflation higher if the fallout continues to grow. Last month, US average gas prices broke through $4 a gallon, and the squeeze on oil and gas is expected to trickle into other industries.

US average gas prices reached $5 a gallon at the time while inflation reached a generational high of 9%. The oil price shock is reminiscent of higher prices that were seen in 2022, after Russia invaded Ukraine. Experts say that every $10 increase in the price of a barrel of oil can lead to a 0.2% climb in inflation.