Employers announced fewer planned job cuts in March, even as government sector layoffs mounted, according to a report released Wednesday. The number of jobs cut fell 18 percent to 41,528 from February’s 50,702, according to outplacement consulting firm Challenger, Gray & Christmas. Year over year, job cuts dropped 39 percent from 67,611 in March 2010.

“The good news is that other areas of the economy appear to have stabilized in terms of downsizing activity. The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs,“ Rick Cobb, executive vice president of Challenger, Gray & Christmas, said in a statement.

The March numbers mean that 130,749 job cuts were announced in the first three months of 2011, the lowest first-quarter total since 1995.

But for workers in public sector jobs, it was not a good month. Government positions dominated planned job cuts, accounting for 19,099, or 46% of all announced reductions.

“It is difficult to be optimistic about the outlook for government workers,“ Cobb said. “Most cities and states have only just begun to address their massive budget deficits, and we have yet to see how budget cutbacks are going to impact workers at the federal level.“

The Challenger report — along with an additional report from ADP — typically set the tone for the government’s highly anticipated monthly employment data, which is due Friday.

Ahead of the jobs report, economists surveyed by CNNMoney are predicting the economy added 180,000 jobs in March, while the unemployment rate held steady at 8.9 percent.