US job growth is likely to pick up in March, as war casts a shadow over the labor market

Written by Lucia Mutikani

WASHINGTON, April 3 (Reuters) – U.S. job growth may have picked up in March as a health workers’ strike ended and temperatures warmed, but downside risks to the labor market continued to mount due to the ongoing war in the Middle East.

The expected return to the pace of last year is about to accelerate, economists said. The labor market has been plagued by uncertainty, starting with President Donald Trump’s aggressive tariffs. Just as some of the clouds began to clear, the US Supreme Court in February struck down Trump’s executive orders under a law meant to be used in national emergencies.

Trump, however, responded by imposing a global tariff for 150 days. At the end of February, the US and Israel launched attacks against Iran, sending oil prices around the world rising by more than 50%, and raising the price of domestic gasoline. Economists say the month-long war has added another level of uncertainty for businesses, and they expect the labor market to pick up this quarter.

“We’ve seen this over the past year, uncertainty putting businesses behind when it comes to hiring,” said Sophia Kearney-Lederman, senior economist at FHN Financial. “Last year, the biggest uncertainty was around rates. This year, it’s around what the war in the Middle East and rising oil prices will mean.”

The closely watched jobs report by the Bureau of Labor Statistics on Friday will likely show unemployment benefits increased by 60,000 jobs last month, a Reuters poll of economists predicted. Payrolls fell by 92,000 jobs in February, the sixth largest since January 2025 and the second largest.

The unemployment rate is forecast to remain unchanged at 4.4%, but some economists believe it could rise to 4.5%. Good Friday is not a public holiday in the United States, although some stock markets are closed.

About 31,000 Kaiser Permanente nurses in California and Hawaii returned to work in late February, which should boost health care wages in March. Health care has been the main pillar of job growth and economists expect it to remain so, citing demographic changes.

A decrease in construction activity as well as leisure and hospitality income is expected after the decline caused by the bad winter weather.

Last month’s job gains may have been limited to a few industries, including social services. Data from the BLS this week showed job openings fell by the most in nearly 1-1/2 years in February, pointing to a slackening demand for workers.