US jobs surge unexpectedly in March despite Iran war

Employers added 178,000 jobs, far more than had expected, the Labor Department says.

On Good Friday, U.S. stock markets were closed, but futures traded modestly lower following a surprisingly strong March jobs report. Futures for the S&P 500, Dow Jones, and Nasdaq slipped 0.3%, 0.2%, and 0.4%, respectively. The U.S. added 178,000 jobs in March, rebounding from February’s 133,000 job losses, and unemployment fell to 4.3%. Energy markets were also closed after a sharp rise in crude prices on Thursday due to concerns over prolonged conflict with Iran. U.S. benchmark crude surged 11.4% to $111.54 per barrel, and Brent crude rose 7.8% to $109.03. President Donald Trump vowed continued U.S. military action in Iran without a clear end timeline, raising fears over disruption in the Strait of Hormuz—a crucial oil transit route. While the U.S. imports little oil from the Gulf, global prices are impacted by disruptions. Asian markets had mixed results: Japan’s Nikkei rose 1.3%, South Korea’s Kospi jumped 2.7%, while China’s Shanghai Composite dropped 1%. Major markets in Europe and parts of Asia were closed for the holiday.

Despite uncertainty surrounding the effects of the Iran war and a surge in energy prices, American consumers have demonstrated resilience. Recent data released by the Census Bureau indicates a 0.6% rise in retail sales for February, rebounding from a January decline. Core control sales, a key input for GDP calculations, also showed solid growth—0.5% overall or 0.2% when adjusted for inflation. Notably, wage growth has remained strong even in the face of slower employment growth, providing continued support for consumer demand. However, economic analysts caution that March introduced new challenges, casting some doubt over future personal consumption trends. Still, economists such as Lydia Boussour from EY-Parthenon highlight that current spending patterns show little sign of consumer pullback.

U.S. jobless aid applications fell to 202,000 for the week ending March 28, 2026, down by 9,000 from the prior week, signaling that layoffs remain low despite economic challenges and the ongoing war with Iran. This number was below analysts' expectations and continues a trend of relative stability in weekly claims, which have mostly ranged between 200,000 and 250,000 since the pandemic recovery. However, the labor market is showing signs of strain. Major companies such as Oracle, Morgan Stanley, Block, UPS, and Amazon have recently announced layoffs. February saw a surprising decline of 92,000 jobs, and revisions further reduced December and January totals by 69,000, pushing the unemployment rate up to 4.4%. Job growth has slowed significantly, with fewer than 200,000 jobs added in 2025 compared to 1.5 million in 2024. The economy is also coping with rising energy costs—oil prices surged over 40% due to the Iran conflict—and persistent inflation, with the Fed's preferred inflation gauge at 2.8% in January. These factors have contributed to economic uncertainty, leading the Federal Reserve to hold its benchmark rate steady and fueling concerns that interest rate cuts may be delayed.

The U.S. job market likely rebounded in March, but the ongoing conflict in Iran and rising oil prices may pose challenges to future hiring trends.

In March 2026, the U.S. economy added 178,000 jobs, a significant recovery from the 133,000 lost in February. The unemployment rate dropped to 4.3%, partly due to a reduction in labor force participation, which fell to 61.9%, the lowest since November 2021. Much of the job growth came from the healthcare sector, which added 76,400 jobs, including 31,000 Kaiser Permanente workers returning from a strike. Construction and manufacturing sectors also saw modest growth. Despite the strong numbers, economic uncertainty persists due to the ongoing war with Iran and rising energy prices, which could dampen future hiring. Average hourly wages increased by only 0.2% month-over-month and 3.5% year-over-year, aligning with the Federal Reserve's inflation goals. Analysts noted that March’s gains largely reflect temporary rebounds rather than long-term momentum. Longer-term concerns include minimal hiring in 2025, growing employer reluctance due to tariffs and immigration policies, and potential job losses from AI. Economists warn that rising oil prices could soon impact consumer spending and employment. Small businesses, like Bo & Mei, are grappling with these uncertainties while preparing for seasonal demands.

In March 2026, U.S. consumer confidence slightly rose to 91.8 despite escalating energy costs due to the ongoing war in Iran. Although the topline index showed a modest increase, concerns about inflation and worsening economic expectations grew among households. The war has driven national gas prices above $4 per gallon for the first time since 2022, sparking fears of broader economic repercussions. A measure of consumer expectations fell to 70.9, signaling potential recession, while views on current economic conditions improved to 123.3. Inflation pressures remain strong, with core prices up 3.1% in January, making it unlikely that the Federal Reserve will cut interest rates soon. Employment indicators showed weakness, with a surprising 92,000 job cuts in February and job openings declining. The labor market has become stagnant amid trade uncertainties, high interest rates, and the impact of the war. Economic growth slowed to 1.4% in late 2025, dragged down by a government shutdown and reduced consumer activity. Despite rising car-buying plans, home purchasing sentiment fell due to an ongoing housing market slump. Additionally, expectations for rising stock prices dropped notably.