March hiring surge indicates a job market firming up
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The job market's headline numbers have looked pretty good so far in 2026. Some of the more subtle indicators of labor market health have been more worrying. Which should we believe?
The big picture: The latest data — which shows a surge in business hiring in March — points toward a relatively sunny scenario.
- Based on the March Job Openings and Labor Turnover data, steady demand from consumers and businesses means that businesses need new workers even as they try to achieve higher productivity with AI.
- It aligns with other recent evidence suggesting that reports of labor market doom and gloom have been greatly exaggerated.
By the numbers: Employers hired 5.55 million people in March, a stunning rise of 655,000 from February.
- That was enough to bring the hires rate — people newly hired as a share of total employment — up 0.4 percentage point, to 3.5%, its highest since May 2024.
- In another positive sign for the job market, the quits rate ticked up, with 125,000 more Americans voluntarily leaving their jobs — a small move but a sign of greater confidence in finding work elsewhere.
Zoom in: In a particularly welcome sign, several areas where the hiring rate surged the most are cyclical sectors tied to underlying private-sector activity.
- Those include transportation, warehousing and utilities (hiring rate up 1.5 percentage points); professional and business services (0.8 point); and accommodation and food services (0.8 point).
- By contrast, payrolls growth has been narrowly concentrated in sectors like health care, social assistance and state government.
Yes, but: The report wasn't all sunshine and roses. The number of job openings edged down by 56,000, and the number of layoffs and discharges edged up by 153,000.
- Separately, the Institute for Supply Management's survey of service businesses showed slower expansion in April, with its index moving down to 53.6 from 54 in March.
- The ISM's sub-index for employment remained below 50, in contraction territory, in April, though it was less negative than in March — 48, up from 45.2.
Reality check: It can both be true that employers are aggressively looking to use AI and other tools to generate more goods and services with fewer workers and that overall economic activity is strong enough to still need to hire people to keep up with demand.
- The new hiring numbers are certainly consistent with the belief that soft growth in overall payrolls is more about falling labor supply than the absence of labor demand.
- It's also consistent with an unemployment rate that has remained within a narrow range of 4.3% to 4.5% for nine straight months.
Between the lines: We've been talking for years now about the "low-hire, low-fire" equilibrium in the job market. If the March hiring surge turns out to be more than just a blip, it would mean that the first part of that description is no longer operative.
What's next: The Labor Department's April report on payrolls and the unemployment rate is due out Friday. It will give early evidence of how the labor market held up amid the onset of spring.
