Flash Report: Fewer Job Separations Drive Decline in March Unemployment
KEY TAKEAWAYS
- The U.S. unemployment rate dropped to 4.3% in March from 4.4% in February. More precise data show the rate fell to 4.256% from 4.441% during this period.
- Fewer workers leaving or losing their jobs and becoming unemployed mainly drove the downtick in March’s reading.
- Lower job separations, coupled with the unemployment rate’s slight decline, reinforce the view that the labor market remains in a “low hire, low fire” state.
Unemployment
March 2026
4.256%
Precise Rate
Unemployment fell modestly in March, with the headline rate returning to its January level of 4.3%. (See the FRED chart above.) The unemployment rate’s March reading was in line with its average over the past 12 months, excluding October and November, for which data were unavailable. (See the table below.)
Total nonfarm payrolls rose by 178,000 jobs last month, beating market expectations and fully reversing the large drop in February. On net, year-over-year job growth was 0.2% in March. This stability in the labor market is due to slower labor supply growth, likely tied to sharply lower immigration flows in 2025.
That the decline in the unemployment rate came mostly from a decrease in workers leaving or losing their jobs suggests the U.S. labor market’s “low hire, low fire” state continues.
Next, the analysis takes a deeper look at how estimated flows into and out of unemployment during March affected the overall unemployment rate.
DATA HIGHLIGHTS
- While the headline unemployment rate edged down to 4.3% in March, the unrounded rate shows a larger decrease from February of 0.18 percentage points.
- This modest decline stemmed primarily from a dip in the number of job separations, i.e., workers leaving or losing their jobs and becoming unemployed.
| Average Monthly Change in Unemployment Rate (Percentage Points) |
People Losing or Leaving Their Jobs and Becoming Unemployed |
Unemployed People Finding Jobs |
People Previously Not in the Labor Force Who Are Now Seeking Work |
Unemployed Workers Leaving the Labor Force (e.g. Discouraged Workers) |
|
|---|---|---|---|---|---|
| March 2026 | -0.18 | +0.81 | -1.10 | +1.14 | -1.04 |
| Last 3 Months | -0.04 | +0.88 | -1.05 | +1.12 | -1.00 |
| Last 12 Months | 0.00 | +0.95 | -1.09 | +1.12 | -0.99 |
| SOURCES: Bureau of Labor Statistics and Research staff’s calculations. | |||||
| NOTES: Average changes over the last 12 months exclude October and November, for which data were unavailable. Data are seasonally adjusted. The overall change is based on the precise unemployment rate for these periods; for example, the unemployment rates were 4.2561% in March and 4.4409% in February. The flow components into and out of unemployment add up to the change in unemployment with a negligible residual. See Maximiliano Dvorkin and Serdar Ozkan’s St. Louis Fed On the Economy blog post “The Recent Ins and Outs of Unemployment: Using Flows to Study Labor Market Dynamics” for more information about this method. | |||||
The modest decline in unemployment, primarily due to a decrease in the rate of workers who left or lost their jobs, supports the notion of a resilient labor market. Other components of unemployment flows—unemployed people finding jobs and labor force transitions (i.e., people exiting or entering the labor force)—remained close to their averages over the past 12 months. (See the table above.)
Citation
ldquoFlash Report: Fewer Job Separations Drive Decline in March Unemployment,rdquo St. Louis Fed On the Economy, April 3, 2026.
This blog offers commentary, analysis and data from our economists and experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.
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