The US labour market staged a strong rebound in March, posting its largest monthly job gain in more than a year. Nonfarm payrolls rose by 178,000, a sharp turnaround from February’s contraction and well above market expectations, signalling continued resilience in domestic demand despite rising global and policy-related uncertainties.

Job growth was broad-based and led by services. Healthcare hiring surged following the resolution of labour disruptions, while leisure and hospitality rebounded strongly. Construction activity benefited from improved weather and infrastructure momentum, and manufacturing recorded its strongest increase since late 2023. Together, these gains helped push the unemployment rate slightly lower to 4.3%.

However, underlying labour supply constraints remain evident. Labour force participation fell further, with a large number of workers exiting the workforce, masking what would otherwise have been a higher unemployment rate. Wage growth and hours worked moderated, suggesting employers remain cautious despite improved hiring momentum. Overall, the data point to a labour market that is resilient but increasingly constrained by longer-term participation trends.