Author：Currency Explorer
With the healthcare workers' strike ending and temperatures rising, U.S. job growth is expected to rebound in March, but the ongoing conflict in the Middle East is accumulating downside risks to the labor market.
Economists say,This rebound will bring employment back to the near-stagnant growth levels of last year.The U.S. labor market has been plagued by uncertainty, initially stemming from President Trump's aggressive import tariff policies. Just as the uncertainty was beginning to dissipate, the U.S. Supreme Court ruled in February that the tariff measures implemented by Trump under the National Emergency Act were invalid.
However, Trump promptly announced a global tariff that would last for up to 150 days. By the end of February, the US and Israel launched strikes against Iran, pushing global oil prices up by over 50%, and gasoline prices in the US rose accordingly. Economists pointed out that...This month-long conflict has added a new layer of uncertainty to businesses and is expected to impact the job market this quarter.
“We saw last year that uncertainty makes companies more cautious and hesitant in hiring,” said Sophia Kearney-Lederman, senior economist at FHN Financial. “Last year, the core uncertainty was tariffs, and this year it’s the impact of the Middle East conflict and rising oil prices.”
Economists surveyed by Reuters expect the closely watched jobs report released Friday by the U.S. Bureau of Labor Statistics to show that nonfarm payrolls increased by 60,000 in March. In contrast, nonfarm payrolls fell by 92,000 in February, marking the sixth decline since January 2025 and the second-largest drop.
The unemployment rate is expected to remain unchanged at 4.4%, but some economists believe it could rise to 4.5%.Although some financial markets are closed, Good Friday is not a federal holiday in the United States.
The return to work of approximately 31,000 striking nurses at Kaiser Permanente in California and Hawaii at the end of February is expected to boost healthcare employment in March. Healthcare has been a major pillar of job growth, and economists expect this trend to continue, primarily due to demographic changes.
After declining due to the severe cold weather, employment in the construction and leisure hospitality industries is expected to rebound.
Last month's job growth may have been limited to a few sectors, such as social assistance. Data released this week by the U.S. Bureau of Labor Statistics shows that...February saw the largest drop in job openings in nearly a year and a half, indicating that labor demand is slowing.
“Everything is progressing extremely slowly, there is a lot of uncertainty, and we are still deporting immigrants,” said Ron Hetrick, senior labor economist at Lightcast.
Labor supply growth hits record low
Economists say the Trump administration's large-scale deportations reduced the labor supply, ultimately suppressing demand for goods, services, and labor, and exacerbating the labor market paralysis. It is estimated that labor supply growth is at a historically low level, meaning...Fewer than 50,000 new jobs per month are needed to keep up with the growth of the working-age population..
Some estimates show that,The employment break-even point has dropped to zero or even negative.JPMorgan economists warned that"Negative growth in non-farm payrolls in a single month will become increasingly common in the future."He added, "Even if job growth is sufficient to stabilize the unemployment rate, there may still be negative job growth for at least one-third of the time each month."
Although the March data may not yet reflect the impact of the Middle East conflict, some economists say,The April jobs report may reveal a significant impact.This week, the average national gasoline price in the United States broke through $4 per gallon for the first time in more than three years.
This will push up inflation, erode household purchasing power, offset some of the resilience in wage growth, and thus slow consumer spending. Average hourly earnings in March are expected to rise 0.3% month-over-month and 3.7% year-over-year.
The Middle East conflict in March has already wiped out approximately $3.2 trillion in stock market value. Trump vowed on Wednesday to launch a more forceful attack on Iran.
“Businesses will shrink their defenses and enter a period of dormancy,” said Brian Bethune, professor of economics at Boston College. “I think this phase may last for one or two months, and the impact may become apparent in April or May. The economic outlook for the second quarter is not optimistic.”
Economists say,The March jobs report will not affect the interest rate outlook, and the impact of supply chain disruptions caused by the conflict on the economy will still need to be gradually revealed.
The likelihood of a Federal Reserve rate cut this year has significantly decreased. The Fed kept its benchmark interest rate in the 3.50%-3.75% range last month and anticipates only one rate cut this year.
"Unless the wave of layoffs intensifies, we believe..."While the equilibrium of "low hiring, low layoffs" is not ideal, it is sustainable and does not require preventative policy support from the Federal Reserve.“This is according to Andrew Husby, senior economist at BNP Paribas Securities.”
