The U.S. added 178,000 jobs in March, while federal government employment fell by 18,000, continuing a broader contraction in the federal workforce, according to the Bureau of Labor Statistics.
The headline gain came in above expectations, but the composition of that growth tells the more important story. Hiring continues to come from private-sector industries, while federal employment moves in the opposite direction, reinforcing a shift in where job growth is actually occurring.
Health care, construction, transportation, and warehousing accounted for most of the increase. Health care alone added 76,000 jobs, including about 35,000 workers returning from a strike, while construction added 26,000, and transportation and warehousing rose by 21,000.
At the same time, as noted, federal employment plunged by 18,000 jobs in March and is now down 355,000 from its peak in October 2024, according to the Bureau. That sustained reduction stands in clear contrast to continued gains elsewhere in the labor market and highlights a continued rebalancing away from government payrolls.
“Total nonfarm payroll employment increased by 178,000 in March, and the unemployment rate changed little at 4.3 percent. Job gains occurred in health care, in construction, and in transportation and warehousing. Federal government employment continued to decline.”
Revisions to earlier data also shifted the recent trend. January payrolls were revised up to 160,000 jobs, while February was revised down to a loss of 133,000, leaving total employment slightly lower than previously reported.
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Wage growth remained modest. Average hourly earnings rose in March and were up 3.5 percent over the past year, the slowest annual gain since 2021. Economists had expected somewhat stronger wage growth, underscoring continued uncertainty about how much momentum the labor market is actually carrying.
In March, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.2 percent, to $37.38. Over the year, average hourly earnings have increased by 3.5 percent.
Labor force participation showed little movement. The participation rate held at 61.9 percent, while the number of unemployed people remained near 7.2 million.
Additional indicators pointed to ongoing slack. The number of people working part-time for economic reasons remained at 4.5 million, while 6.0 million people not in the labor force said they still wanted a job. The number of workers marginally attached to the labor force increased to 1.9 million, including 510,000 discouraged workers.
The March report shows steady job growth, but revisions, wage data, and a continued contraction in the federal workforce point to a slower underlying pace than the headline suggests, particularly as hiring gains remain concentrated outside that segment of the labor market and broader participation levels show limited movement, with sector-specific trends continuing to shape how that growth is distributed across the broader economy in the months ahead.
Editor’s Note: President Trump’s effort to shrink Washington’s bloated bureaucracy is already producing measurable results. The federal workforce is now at its lowest level since 1966.
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