The US labor market picked up in March as employers showed signs of resilience amid the US-Israel war in Iran.

After an extraordinary contraction in February, employers added 178,000 jobs last month, ahead of economists’ expectations of about 70,000.

The unemployment rate fell to 4.3%, according to data from the US Bureau of Labor Statistics. 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.

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