The U.S. labor market bounced back in March, with job creation much stronger than expected though the broader picture of a slow-growth labor market held intact.

Nonfarm payrolls rose a seasonally adjusted 178,000 during the month, a reversal from the 133,000 decline in February and better than the Dow Jones consensus estimate for 59,000, the Bureau of Labor Statistics reported Friday. February’s number was revised down by 41,000 while January was revised up by 34,000 to 160,000, putting the three-month average around 68,000.

With job creation higher, the unemployment rate edged lower to 4.3%.

As has been the case, health care was responsible for much of the growth, with the sector adding 76,000. A strike at health-care provider Kaiser Permanente in February hit the sector. The BLS said ambulatory health care services rose by 54,000, with 35,000 coming from the strike workers returning.

Construction saw an increase of 26,000, while transportation and warehousing posted a gain of 21,000.

On the downside, the federal government saw a loss of 18,000, while financial activities lost 15,000.

Though the unemployment rate posted a decline, the move largely came from a decline of 396,000 in the labor force. The share of working-age Americans in the labor force fell to 61.9%, its lowest since November 2021.

The survey of households, which is used to compute the unemployment rate, showed 64,000 fewer people holding jobs. An alternative unemployment figure that counts discouraged workers and those holding part-time jobs for economic reasons edged up to 8%.

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Nonfarm payrolls are expected to bounce back — barely — in March as the bar keeps getting lower for what constitutes a healthy labor market.

The U.S. economy is projected to show job gains of 59,000 for the month, an anemic rate by the standards of previous years this decade but enough to keep the unemployment rate at 4.4%.

If the estimate is reasonably accurate, it actually would represent above-trend job growth for a labor market that has created virtually no jobs over the past year.

Immigration restrictions, shifting demographics and geopolitical uncertainty have left companies eager neither to hire nor fire workers en masse, resulting in a static labor market and a series of ho-hum monthly counts from the Bureau of Labor Statistics. The BLS will release the number Friday at 8:30 a.m. ET, though the stock market will be closed in observance of the Good Friday holiday.

“We have to revise our idea of what a good or bad job number is,” said Guy Berger, chief economist at Homebase, which provides workforce management services for small businesses.

A report like February’s showing job losses “would have been raising alarm bells about the state of the labor market,” he added. “Now we’re like, yeah, that was a very bad report, but it doesn’t freak anybody out about the job market. I didn’t look at that report and say, wow, we’re on the verge of tipping into recession.”

Echoing views expressed by Federal Reserve Chair Jerome Powell and other central bankers, Berger said he’s more focused on the unemployment rate as a gauge of labor market stability.

In a recent report, the St. Louis Fed updated previous research on the breakeven level for job growth. The bank’s economists now think that number could be as low as 15,000, with a high end of 87,000.

That’s a steep drop from an estimate as recent as April 2025 that showed the breakeven level at 153,000, and an update in August of that year putting the number between 32,000 to 82,000.

In other words, the labor market needs nowhere near the job growth it required previously to keep the population near full employment.

“Things have been slowly getting worse each for the last few years,” Berger said, but added, “There’s no real sign of us tipping into a recession.”

Some economists on Wall Street disagree. Goldman Sachs, Moody’s Analytics and others in recent days have raised their odds of recession in the next 12 months, with a focus on threats from a slowing jobs picture and surging energy costs.

Earlier this week, BLS data showed that the rate of hiring as a share of the workforce fell to 3.1%, its lowest level since the Covid recession in 2020 and, before that, January 2011.

Still, Homebase’s data is consistent with other indicators, including the ADP private payrolls report for March, showing modest gains in payrolls. February’s loss of 92,000 jobs came in part due to a since-resolved strike at health-care provider Kaiser Permanente that sidelined some 31,000 workers in California and Hawaii.

Private sector hiring was a bit better than expected in February, though most of the job creation came from just two sectors, ADP reported Wednesday.

Companies added a seasonally adjusted 63,000 workers during the month, an improvement from the downwardly revised 11,000 in January and better than the Dow Jones consensus estimate for 48,000, according to the payrolls processing firm’s latest update.

Though the total beat expectations, the issue of breadth continued to be a problem for the labor market.

Education and health services, an industry that has been the primary driver for job creation, added 58,000 jobs for the month, easily leading all sectors. After that, construction contributed 19,000, with the two industries offsetting stagnant growth across most other sectors.

Professional and business services saw a decline of 30,000 positions, manufacturing lost 5,000 and trade, transportation and utilities was off 1,000. Other than a gain of 11,000 in information services, there was little movement elsewhere. Manufacturing continued to decline despite President Donald Trump’s efforts to use tariffs to reshore jobs in the industry.

On the wage side, pay grew 4.5% for those staying in their jobs, unchanged from January. However, the wage gains for job switchers moved down to 6.3%, a 0.3 percentage point decline from the prior month. Those results reduced the incentive for changing jobs to the lowest level since ADP began tracking the metric.

“We’ve seen an increase in hiring and pay gains remain solid, especially for job-stayers,” said ADP chief economist Nela Richardson. “But with hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs.”

In a switch from recent months, job creation was concentrated at businesses with fewer than 50 employees. That group saw gains of 60,000, while big businesses with 500 or more workers added 10,000 and medium-sized firms reported a drop of 7,000.

Job growth has taken a step down over the past year as the Trump administration has clamped down on illegal immigration and as the pace of post-Covid hiring has slowed. While companies have been reluctant to add workers, layoffs have remained low as well.

The report comes with questions over the state of the labor market as well as worries about stubbornly higher inflation, the latter coming even more into view with the fighting in Iran and the Middle East.

Recent statements from Federal Reserve officials indicate somewhat higher confidence that the jobs picture is stabilizing. At the same time, worries are increasing that a bump in oil prices will drive inflation higher. Traders are now indicating the next Fed interest rate cut won’t come until at least July and have lowered the probability for a second cut this year, according to the CME Group’s FedWatch tracker.

The ADP release precedes Friday’s nonfarm payrolls report from the Bureau of Labor Statistics. Wall Street is looking for a February increase of 50,000 jobs from the report, which unlike ADP also includes government hiring. Economists expect the unemployment rate to hold steady at 4.3%.