US employment figures delivered a pleasant surprise in March after several months of softness. Nonfarm payrolls came in well above expectations, while the unemployment rate edged lower to 4.3% from 4.4% in February – contrary to forecasts that it would remain unchanged.
US Jobs Market Holds Firm as Middle East War Begins to Ripple Through Economy
7 April 2026 - 20:00 CEST
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Gains were concentrated in health care, construction, transportation and warehousing, though federal government employment continued to shrink, according to the Bureau of Labor Statistics.
This resilience is emerging against a difficult backdrop: slowing immigration, a shrinking natural working-age population and growing economic policy uncertainty.
Private sector shows steady pulse
A similar picture appeared in the private sector. The ADP National Employment Report showed 62,000 jobs added in March, beating forecasts of 40,000. Small businesses – those with 1 to 19 employees – led the way, contributing 112,000 new positions.
Sector gains were strongest in education and health services (+58,000), construction (+30,000), and information (+16,000). Losses were concentrated in trade, transportation and utilities (-58,000) and manufacturing (-11,000).
Nela Richardson, chief economist at ADP, said in the release: "Overall hiring is steady, but job growth continues to favour certain industries, including health care. In March, this solid performance was accompanied by a boost in pay gains for job-changers."
Caution in the background
The latest Job Openings and Labor Turnover Survey (JOLTS) for February offered a more cautious signal. Job openings stood at 6.9mn, down from a revised 7.2mn the previous month and slightly below expectations. Notable declines came in accommodation and food services (-211,000), as well as mining and logging (-12,000).
Separations held steady at 5.0mn (a rate of 3.1%), while quits remained little changed at 3.0mn (1.9%). The lack of movement in quits suggests many workers are choosing to hold on to their current jobs amid heightened economic uncertainty.
War begins to show early effects
On 9 Apr, the Bureau of Economic Analysis will release the February Personal Consumption Expenditures (PCE) inflation data. Given that the US-Israel conflict with Iran only began on 28 Feb, its full impact is not yet expected to show up in the figures.
Nevertheless, early warning signs are already appearing. The average price of a gallon of petrol has climbed above $4.10. Companies are starting to pass on rising costs: Amazon introduced a 3.5% fuel and logistics surcharge on fulfilment fees for sellers, the US Postal Service announced an 8% time-limited price adjustment for transportation, and both United Airlines and JetBlue have raised checked-bag fees.
Policy and market implications
The stronger-than-expected labour market data, combined with the first signs of war-related inflationary pressure, gives the Federal Reserve’s FOMC significant room to keep interest rates where they are for now. Robust jobs numbers reduce the immediate need for rate cuts, while the risk of higher inflation from energy and logistics costs adds another layer of caution.
Longer-term government bond yields have already started to rise as markets anticipate higher defence spending, wider budget deficits, and increased debt issuance. This tightening of financial conditions is likely to put further pressure on risk assets – including cryptocurrencies – in the coming weeks.
