Economic experts anticipate that March employment figures will show improvement after February’s disappointing numbers, driven by the conclusion of healthcare worker strikes and seasonal weather improvements. However, the ongoing Middle East conflict is creating fresh concerns about future job market stability.
The expected recovery represents a return to the sluggish growth patterns seen throughout the previous year, according to economic analysts. Business uncertainty has been a persistent challenge, beginning with President Donald Trump’s trade policies and continuing through various geopolitical developments.
Following the Supreme Court’s February decision to overturn certain trade duties, Trump implemented new global tariffs lasting up to 150 days. The situation became more complex when U.S. and Israeli forces launched strikes against Iran at February’s end, causing global oil prices to surge over 50% and driving up domestic fuel costs. The month-long conflict has added another layer of business uncertainty that economists expect will impact employment this quarter.
“We saw this last year, uncertainty puts businesses on the back foot when it comes to hiring,” said Sophia Kearney-Lederman, a senior economist at FHN Financial. “Last year, the big uncertainty was around tariffs. This year, it’s around what the conflict in the Middle East and rising oil prices will mean.”
Friday’s Bureau of Labor Statistics employment report is expected to reveal that nonfarm payrolls grew by 60,000 positions last month, based on a Reuters economist survey. February saw payrolls decline by 92,000 jobs, marking the sixth decrease since January 2025 and the second-largest drop during that period.
Unemployment rates are projected to remain steady at 4.4%, though some analysts believe it could climb to 4.5%. Despite Good Friday not being a federal holiday, some financial markets will be closed.
Approximately 31,000 Kaiser Permanente nurses in California and Hawaii who were on strike returned to their positions in late February, which should positively impact healthcare employment numbers for March. Healthcare continues to serve as the primary source of job growth, with economists citing demographic trends as a driving factor.
Construction and leisure/hospitality sectors are also expected to show improvement after weather-related declines during the winter months.
Last month’s job creation was likely limited to specific sectors, including social assistance programs. Recent BLS data revealed that job openings fell by the largest margin in nearly 18 months during February, indicating weakening labor demand.
“Everything is just moving at a snail’s pace, lots of uncertainty, and we are still deporting people,” said Ron Hetrick, a senior labor economist at Lightcast.
Mass deportation policies implemented by the Trump administration have also contributed to labor market challenges, economists note, by reducing available workers, which ultimately impacts demand for goods, services, and additional employees. With historically low labor supply growth, economists estimate that fewer than 50,000 monthly jobs are needed to match working-age population growth.
Some projections suggest the break-even rate could be zero or negative. JPMorgan economists warned that “negative payroll readings in any given month will become more common,” noting that “even with job growth sufficient to stabilize the unemployment rate, there could be negative payroll readings at least a third of the time.”
While March data may be too early to reflect Middle East conflict impacts, some economists believe effects could appear in April’s employment report. National retail gasoline prices have exceeded $4 per gallon this week for the first time in over three years.
Rising fuel costs will contribute to increased inflation and reduce household spending power, counteracting wage growth benefits and slowing consumer spending.
Average hourly earnings are projected to increase 0.3% last month, representing a 3.7% annual wage growth rate.
The conflict erased approximately $3.2 trillion from stock market values in March. Trump announced plans for more aggressive Iranian strikes on Wednesday.
“Businesses are going to hunker down and go back in the bunker for a period of time,” said Brian Bethune, an economics professor at Boston College. “My guess is that period will likely be one or two months. So we will probably see that in April and May. The prospects for the second quarter are just not good.”
March employment data will not influence interest rate decisions, economists said, as supply chain disruption effects from the conflict have yet to fully impact the economy.
Rate cut possibilities for this year have significantly decreased. The Federal Reserve maintained its benchmark overnight interest rate between 3.50%-3.75% last month.
“Absent a pickup in layoffs, we see the ‘low-hire, low-layoff’ equilibrium as uncomfortable but sustainable and one that doesn’t call for pre-emptive Fed policy support,” said Andrew Husby, a senior economist at BNP Paribas Securities Corp.
