WASHINGTON, April 3 (Reuters) – U.S. job growth picked up sharply in March as a health care workers’ strike ended and temperatures rose, but labor market risks rose amid a war with Iran that has no clear end in sight.
The biggest increase in nonfarm payrolls in 15 months reported by the Labor Department in its closely watched jobs report on Friday followed a sharp decline in February. However, the rebound reflects the health of the labor market. The average work week was shorter last month.
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Although the unemployment rate fell to 4.3% from 4.4% in February, that is because 396,000 people left their jobs. That goes beyond eliminating the slack in family work. Economists say March was too early to catch the Middle East conflict, and some expect that to become clear once the April jobs report comes out.
“Wages have been boosted by one-time factors; the trend still looks weak,” said Samuel Tombs, chief economist for the United States at Pantheon Macroeconomics.
Jobless claims rose by 178,000 jobs last month after falling 133,000 in February, the Bureau of Labor Statistics said. Economists polled by Reuters had predicted that wages would rise by 60,000 jobs after the 92,000 reduction previously reported in February.
Estimates ranged from a loss of 25,000 positions to a gain of 125,000 jobs. Payroll has changed little over the past 12 months.
The March jobs report is likely to have no impact on the interest rate outlook, with the effects of supply disruptions still lingering in the economy. The chances of a rate cut this year are very slim. The Federal Reserve left its overnight interest rate in the 3.50% to 3.75% range last month.
The health care sector accounted for most of the job gains, adding 76,000 positions, in part reflecting the return to work of 35,000 workers in doctors’ offices after a strike. Jobs also increased in hospitals.
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The warmer weather boosted construction activity, which increased by 26,000 positions. Transportation and warehousing jobs increased by 21,000 jobs. Transportation and warehousing jobs fell by 139,000 from their peak in February 2025.
There has been an increase in social welfare work. But federal government employment has been cut by another 18,000. Since it peaked in October 2024, federal government employment has fallen by 355,000, or 11.8%. There have been job losses in the financial services sector.
The labor market has been plagued by uncertainty, starting with President Donald Trump’s aggressive tariffs. Just as some of the clouds began to clear, the US Supreme Court in February struck down Trump’s executive orders under a law meant to be used in national emergencies.
At the end of February, the US and Israel launched attacks against Iran, sending oil prices worldwide more than 50%, and raising the price of domestic gasoline. Economists say the war, which is now in its second month, was part of the uncertainty for businesses, and they expect the labor market to be there in the second quarter that has just started.
The average price of gasoline in the country this week rose to $4 a gallon for the first time in more than three years.
Mass layoffs by the Trump administration have also contributed to a crippled labor market, economists said, by reducing supply, which ultimately hurts demand for goods and services, and workers.
The average work week fell to 34.2 hours from 34.3 hours in February. Average hourly earnings rose 0.2% after increasing 0.4% in February. Earnings rose 3.5% in March year over year after rising 3.8% in February.
Reporting by Lucia Mutikani; Edited by Dan Burns and Andrea Ricci
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