U.S. Job Growth Anticipated in March Amid Middle East Uncertainty

U.S. job growth is anticipated to have increased in March, following a period where a healthcare worker strike concluded and temperatures improved. Economists suggest this expected recovery will bring job growth back to a pace similar to the previous year.

However, the ongoing conflict in the Middle East is introducing potential risks to the labor market.

Global Tensions Add New Layer of Uncertainty

The labor market has faced uncertainty, initially from import tariffs. The U.S. Supreme Court struck down these duties in February, which were imposed under a national emergency law. President Trump responded by implementing a global tariff for up to 150 days.

Concurrently, the U.S. and Israel launched strikes against Iran at the end of February, causing global oil prices to rise by over 50% and increasing domestic gasoline prices. Economists indicate that this conflict adds another layer of uncertainty for businesses, with expected impacts on the labor market this quarter.

Sophia Kearney-Lederman, a senior economist at FHN Financial, noted that uncertainty historically causes businesses to hesitate with hiring. She highlighted that last year's uncertainty centered on tariffs, while this year it is focused on the implications of the Middle East conflict and rising oil prices.

March Payrolls and Unemployment Forecast

A Reuters survey of economists predicts that nonfarm payrolls increased by 60,000 jobs in March. This follows a decline of 92,000 jobs in February, which was the sixth drop since January 2025 and the second-largest.

The unemployment rate is projected to remain at 4.4%, though some economists foresee a potential rise to 4.5%.

Sectoral Contributions to Growth

The return to work of approximately 31,000 striking nurses at Kaiser Permanente in California and Hawaii in late February is expected to boost healthcare payrolls in March. Healthcare is cited as a primary contributor to job growth, a trend economists anticipate will continue due to demographic changes.

Construction employment and leisure and hospitality payrolls are also expected to show recovery, after previous declines attributed to winter weather conditions. Job growth in March was likely concentrated in specific sectors, including social assistance.

Data from the Bureau of Labor Statistics (BLS) recently showed that job openings decreased significantly in February, indicating a reduction in labor demand.