The U.S. labor market showed signs of a modest rebound in March following a weak February, as payroll employment increased and the unemployment rate edged down to 4.3%. Job growth was led by healthcare, construction, and transportation and warehousing. However, signs of cooling are emerging. Job openings posted their largest decline in nearly a year and a half in February, pointing to a potential easing in labor demand. Meanwhile, growing geopolitical uncertainty adds further downside risk to the labor market outlook.

Wage growth slowed in March, with average hourly earnings rising 3.5% year-over-year. This pace is 0.7 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 178,000 in March, following a downwardly revised decline of 133,000 jobs in February. Revisions to prior months were modest overall. The monthly change in total nonfarm payroll employment for January was revised up by 34,000 from +126,000 to +160,000, while the change for February was revised down by 41,000 from -92,000 to -133,000. Combined, these revisions reduced previously reported employment by 7,000 jobs.

Despite March’s rebound, job growth in early 2026 remains well below 2024 levels but better than the 2025 pace. Through March, monthly payroll gains have averaged 68,000, compared with 10,000 per month in 2025 and 122,000 in 2024.

The unemployment rate edged down to 4.3% in March from 4.4% in February. Over the month, the number of persons unemployed decreased by 332,000, while the number of persons employed declined by 64,000.

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—declined 0.2 percentage points to 61.9%. This marks the lowest level since December 2021 and remains below its pre-pandemic level of 63.3% recorded at the beginning of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate also edged down to 83.8%.

In March, job gains were led by health care (+76,000), construction (+26,000), and transportation and warehousing (+21,000), while federal government employment continued to decline. Since reaching a peak in October 2024, federal government employment has fallen by 355,000, or 11.8%.

Construction Employment

Employment in the overall construction sector rose by 26,000 jobs in March, following a downwardly revised loss of 13,000 in February. Within the industry, residential construction added 14,300 jobs, while non-residential construction increased 12,200.

Residential construction employment now stands at 3.3 million in March, including 932,000 workers employed by builders and remodelers and nearly 2.4 million residential specialty trade contractors.

The six-month moving average of job gains for residential construction turned positive at 800 per month, ending a 14-month stretch of negative readings. However, over the last 12 months, residential construction has shed a net 29,300 jobs, marking the thirteenth consecutive annual decline and the longest stretch of annual losses since the Great Recession. Despite these declines, residential construction has gained 1,318,200 positions from its post-Great Recession low.

Meanwhile, the unemployment rate for construction workers rose to 5.6% in March on a seasonally adjusted basis, though it remains relatively low compared with historical norms.