The anticipated rebound in US job growth for March, following the conclusion of a healthcare workers' strike and warmer weather, may simply represent a return to the nearly stagnant growth levels seen last year. The labor market has been persistently battered by uncertainty, primarily driven by aggressive import tariffs implemented by former President Trump. Just as some of this uncertainty began to fade, with the US Supreme Court ruling in February that tariffs imposed under a national emergency statute were invalid, Trump announced new global tariffs effective for up to 150 days.
Furthermore, US and Israeli strikes on Iran in late February triggered a surge in global oil prices of over 50%, pushing up domestic US gasoline costs. Economists state that this ongoing conflict, now a month long, has introduced fresh uncertainty for businesses, with impacts on the labor market expected this quarter.
"We saw this last year—uncertainty makes businesses cautious and conservative in their hiring," said a senior economist at FHN Financial. "Last year's biggest uncertainty was tariffs; this year, it's the impact of the Middle East conflict and rising oil prices."
The closely watched employment report from the Bureau of Labor Statistics, due Friday, is forecast by economists to show an increase of 60,000 non-farm payrolls in March. This follows a decline of 92,000 jobs in February, which was the sixth monthly drop since January 2025 and the second-largest decrease.
The unemployment rate is projected to hold steady at 4.4%, though some economists suggest it could rise to 4.5%. While Good Friday is not a federal holiday in the US, some financial markets will be closed.
The return to work of approximately 31,000 striking nurses from Kaiser Permanente in California and Hawaii in late February is expected to boost healthcare employment for March. The healthcare sector has been a primary pillar of job growth, and economists note that demographic trends will ensure it continues in this role.
Rebounds are also anticipated in construction and leisure/hospitality sectors, which had been negatively affected by severe winter weather in previous months.
Job growth last month was likely concentrated in only a few sectors, including social assistance. Recent data from the Bureau of Labor Statistics showed the largest drop in job openings in nearly a year and a half during February, indicating a slowdown in labor demand.
"Everything is moving incredibly slowly, there's a lot of uncertainty, and we are deporting immigrants," commented a senior labor economist at Lightcast.
The growth rate of labor supply has hit a record low. Economists indicate that large-scale deportation efforts under the previous administration have exacerbated labor market stagnation by reducing supply, which ultimately dampens demand for goods, services, and labor. Estimates suggest that with labor supply growth at historic lows, the economy now needs to add fewer than 50,000 jobs per month to keep pace with growth in the working-age population.
Some estimates place this break-even rate at zero or even negative. Economists at JPMorgan Chase warned, "Negative monthly job growth will become more common going forward," adding that "even if job growth is sufficient to stabilize the unemployment rate, negative monthly readings could occur at least one-third of the time during the year."
While the impact of the Middle East conflict may not be fully visible in the March data, some economists believe the April employment report could show signs. This week, the US national average retail gasoline price surpassed $4 per gallon for the first time in over three years.
This development will likely increase inflation, erode household purchasing power, partially offset the benefits of wage growth, and slow consumer spending.
Average hourly earnings for March are forecast to rise 0.3% month-over-month, with a year-over-year increase of 3.7%.
The conflict has already erased approximately $3.2 trillion from US stock values in March. Recently, the former president vowed more forceful strikes against Iran.
"Businesses will tighten their belts and re-enter a wait-and-see mode," said an economics professor at Boston College. "I think this phase could last a month or two, meaning April and May. The economic outlook for the second quarter is not optimistic."
Economists state that the March employment report will not influence the interest rate outlook, as the economic effects of supply chain disruptions caused by the conflict will take time to materialize.
The likelihood of interest rate cuts this year has diminished significantly. The Federal Reserve held the benchmark overnight lending rate steady in the 3.50%-3.75% range last month.
"Until layoffs increase, we view this 'low-hiring, low-firing' equilibrium as suboptimal but sustainable, not requiring preemptive policy support from the Fed," said a senior economist at BNP Paribas Securities.
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