WASHINGTON — America’s employment sector appears to have recovered in March following a disappointing February, though economists caution that international tensions and rising energy costs may threaten future progress.
Federal labor officials are set to announce Friday that employers across the nation created approximately 60,000 new positions last month, reversing February’s loss of 92,000 jobs. Unemployment is projected to remain steady at 4.4%, based on forecaster predictions compiled by FactSet.
March’s employment gains were likely boosted by milder temperatures and the return of 31,000 Kaiser Permanente workers who ended their February strike.
Nancy Vanden Houten, Oxford Economics’ chief U.S. economist, anticipates that Iran’s military conflict and the corresponding spike in fuel costs will dampen hiring activity. However, “the impact of the war might not be felt for some time,” she noted in her analysis. Corporate decisions regarding staffing and capital investments typically require time before appearing in official statistics.
Additionally, substantial tax refunds this season will sustain consumer spending and economic momentum. Yet she cautioned that “another month or two of reasonably good labor market and economic data won’t be a reason to conclude that the economy isn’t facing downside risks related to the war.”
Vanguard senior economist Adam Schickling has revised his unemployment projections upward to 4.6% by December, compared to his pre-conflict estimate of 4.2%.
The nation’s employment landscape already faces significant challenges.
Throughout the previous year, organizations averaged merely 9,700 monthly job additions, marking the slowest growth outside recession periods since 2002. Companies have hesitated to expand their workforce due to uncertainties surrounding President Donald Trump’s trade and immigration initiatives. Recent Labor Department data revealed the weakest hiring activity since April 2020, during pandemic shutdowns.
Simultaneously, employers have avoided layoffs, creating what analysts call a “no-hire, no-fire” environment that prevents younger job seekers from entering the market. Concerns are mounting that artificial intelligence technology is eliminating entry-level positions.
Employment growth remains concentrated in healthcare and social services sectors, including childcare and rehabilitation facilities. When excluding this category, all remaining private employers eliminated 285,000 positions over the past twelve months.
Schickling projects that healthcare and social assistance will represent 45% of new hiring over the coming four years, compared to the historical norm of 20%. This shift mirrors America’s aging demographics, similar to patterns Japan experienced during the early 2010s, according to his research.
