On Friday (April 3), the U.S. Bureau of Labor Statistics (BLS) released its March employment report, showing a significant rebound in the U.S. job market. Non-farm payrolls increased by 178,000, far exceeding market expectations of 60,000; February's data was revised significantly downward to a decrease of 133,000. The unemployment rate fell to 4.3%, also better than market expectations.



This rebound was primarily driven by two short-term factors: the end of the healthcare strike. February saw a sharp decline in employment due to a strike involving over 30,000 healthcare workers, but the job market quickly recovered after the strike ended in March. The healthcare sector added 76,000 jobs in March alone, with 54,000 in outpatient services (35,000 of which came from doctors' offices) and 15,000 in hospitals. This represents a significant improvement over the industry's 12-month average of only 29,000 new jobs per month.

The warming temperatures and weather-related recovery: Severe cold weather in February dragged down the construction, leisure, and hospitality industries, but employment in these sectors rebounded in March as the weather improved. The construction industry added 26,000 jobs (although the overall net change over the past 12 months was close to zero).

Meanwhile, the number of federal government employees continued to decline, decreasing by 18,000 in March. Since peaking in October 2024, the number of federal government employees has decreased by a total of 355,000, a drop of 11.8%.

This stronger-than-expected data may further reinforce the Federal Reserve's focus on inflation risks—especially given the uncertainty surrounding the Middle East situation (the uncertain future of the war with Iran) has led to a rapid rise in energy prices, exacerbating inflationary pressures. Downside risks in the labor market are rising; while strong employment is a positive factor, it also makes the market more cautious about the pace of Fed rate cuts.

Following the data release, the yield on the two-year U.S. Treasury note continued its upward trend, rising 7.7 basis points to 3.875%; the yield on the 10-year Treasury note rose 3.9 basis points to 4.349%.

Institutional Views

A New York Times financial markets correspondent in New York: Stock markets were closed today for the Easter holiday, but the bond market continued trading until noon local time. Investors initially seemed to interpret the new data as "allowing the Federal Reserve to focus on reducing inflation against a backdrop of a still-solid labor market." This likely means higher interest rates. The yield on the two-year Treasury note, which is sensitive to changes in interest rate expectations, rose sharply to 3.85% after the data release.

According to Nick Timiraos, a mouthpiece for the Federal Reserve, after excluding the volatility of the first three months of this year, the country's economy has added an average of 15,000 jobs over the past six months, while the average monthly job growth from 2026 to date is 68,000.

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