US jobs beat forecasts in March, but analysts flag caution amid war impact

The US economy added 178,000 jobs in March, sharply exceeding expectations, even as analysts warned that the headline numbers may mask underlying fragility amid the ongoing US-Israel war on Iran, according to data cited by AFP.Figures released by the labor department on Friday showed a strong rebound from February, when the economy had shed 133,000 jobs. The unemployment rate also edged down by 0.1 percentage points to 4.3%.The gains were significantly higher than forecasts, with economists polled by Dow Jones Newswires and The Wall Street Journal expecting an increase of just 59,000 jobs.The White House welcomed the data as a sign of economic resilience under President Donald Trump’s administration.“Americans can rest assured that after the short-term disruptions of Operation Epic Fury are behind us, America's economic resurgence is set to only accelerate,” spokesperson Kush Desai said, referring to the ongoing conflict.

Health care leads recovery, public sector shrinks

Much of the job growth was driven by the healthcare sector, which added 76,000 positions in March after a decline the previous month, partly due to strike-related disruptions.Construction employment also rose by 26,000 jobs, though the labor department noted that the sector has shown little change compared to a year ago, according to AFP.

In contrast, federal government employment continued to decline, falling 11.8% since October 2024, reflecting the administration’s efforts to reduce the size of government.The report also included downward revisions, with combined job gains for January and February revised lower by 7,000.

Analysts warn of “noise” and rising risks

Despite the strong headline figures, economists urged caution in interpreting the data.“The data was stronger than forecast, but vastly overstates the sustainable pace of job growth,” said Nancy Vanden Houten of Oxford Economics.“The end of a strike, seasonal quirks and a rebound after harsh winter weather likely boosted job growth in some sectors,” she added.Analysts also pointed to growing risks from the geopolitical situation. The conflict involving Iran has disrupted global supply chains and pushed up energy prices, raising concerns about a slowdown.Oxford Economics warned that “downside risks to the labor market have increased,” with expectations that unemployment could rise as the economic impact of the war deepens.

Labour market stable but fragile

Economists described the labour market as holding steady but increasingly vulnerable.Nationwide Chief Economist Kathy Bostjancic said the report showed the job market was in “good standing,” with broad-based private sector gains.However, others pointed to a “low-hire, low-fire” trend, indicating cautious hiring and limited layoffs.“If you look through the noise you have, you know that same picture that we've been looking at, which is a labor market that's holding up, but that has become more fragile, and that remains stuck in this low-hire, low-fire type of environment,” said Lydia Boussour of EY-Parthenon.A decline in labour supply, partly linked to tighter immigration policies, has also contributed to keeping unemployment levels stable despite slower hiring.

Fed likely to stay cautious

The mixed signals from the labour market come as the Federal Reserve weighs its next steps on interest rates.With inflation still a concern and uncertainty around the economic impact of the war, policymakers are expected to maintain a cautious, wait-and-see approach.“We are getting mixed signals, with some key indicators showing signs of steadying while others are suggesting a weakening labor market,” New York Fed President John Williams said earlier.Analysts said the latest report could give the Fed some “breathing room” to focus on inflation in the near term.(With input from agencies)