After a depressed February, the U.S. job market is expected to rebound at least slightly in March, signaling that the economy remains solid amid a season of uncertainty.
Economists predict upcoming federal employment data to show an increase of 57,000 jobs—reversing February’s 92,000 job decline—while March’s unemployment rate may rise slightly to 4.5 percent. The bounceback will be in large part due to negative weather events that disrupted industries in February, including tourism and construction, as well as gains in healthcare.
“All the signs point to it’s not necessarily a robust or strong labor market, but it’s stable,” said Stephen Juneau, senior U.S. economist at Bank of America.
The U.S. has lost 82,000 jobs over the past six months and the job market has been “low hire, low fire,” characterized by slower rates of hiring and turnover, economists said. This trend is due in part to a surge in new, young workers including college graduates and people who left work during the COVID-19 pandemic but are looking for new work now.
While higher labor force participation can be a sign of a healthy economy, fewer jobs puts pressure on the unemployment rate and can increase the amount of time people are looking for or without work, said Cory Stahle, senior economist at the hiring site Indeed.
“If you’re in a job now, it’s a pretty good time to have a job because layoffs have been fairly low,” Stahle said. “But if you’re out of the labor market, trying to come in for the first time, a recent graduate or someone they’re on the sidelines trying to re-enter, it’s maybe harder.”
The chilly job market is linked to macroeconomic uncertainties including ever-changing trade policies from the Trump White House and pricey interest rates. The federal administration’s immigration crackdowns have also hindered the overall supply of workers, all culminating in an unsteady investment opportunities for businesses.
“When you have an environment that feels unstable and chaotic and doesn’t seem to have a long-term strategy, it’s incredibly hard to plan, and we’re seeing that have impacts on hiring,” said Janelle Jones, senior fellow for Groundwork Collaborative.
The jobs data may point to workers who are impacted first and to the greatest extent by an economic downturn, Jones noted, including Black Americans, those experiencing unemployment for six months or longer and individuals who are “underemployed” or working a job below their skill or education level.
The war in Iran, which began in late February, has driven oil prices to over $100 per barrel and blocked global shipping routes. The conflict may influence consumer spending but is unlikely to make a substantial impact in the March employment data, which was collected in the first half of the month. Bank of America’s data through March 21 has shown healthy behaviors in consumer spending so far, Juneau said.
While growth in generative artificial intelligence technologies and automation may cause disruptions to the labor force over time in industries such as professional and business services and computers, economists doubted the March report would clearly show GenAI’s interference in job opportunities.
“AI has been a bit of a scapegoat so far,” Juneau said.
Healthcare job growth has helped prop up the otherwise slow market, which economists expect to continue in March after resolution for strikes among Kaiser workers.
“Healthcare has been a printing press of jobs, so we expect that we’ll get back to that next month,” said Tom Porcelli, chief economist at Wells Fargo.
Meanwhile, several sectors have reported declines since the start of the year, with February’s report revealing fewer jobs in the federal government, transportation and warehousing, manufacturing and information. In addition, the tech sector has reported layoffs and permanent job loss, stabilizing from post-pandemic hiring sprees, Porcelli said.
Inflationary concerns have also paused hiring for many companies, concerns that are echoed by the Federal Reserve. The Fed has held interest rates for the year so far, and Chair Jerome Powell has signaled they don’t expect to make cuts at the April meeting.
Despite headwinds, average hourly earnings are expected to tick up slightly, as are private-sector payrolls, which could hint at a mostly stable second half of the year.
