Will Iran war slow US hiring? Economists say the risks are increasing.

The Iran was there adds new pressure to the slowing US labor market, with at least one major employer already halting hiring plans.

Unilever, which owns brands such as Dove and Vaseline, told CBS News on Tuesday that it is close to hiring. unstable economic situation. In a report obtained by Reuters, the manager of Unilever pointed to “economic and political realities, especially in the conflicts in the Middle East” as the reason for the hiring of the company for three months.

Even before the Iran war began, the U.S. hiring rate had fallen, with the January jobs and labor turnover report hitting its lowest level since 2020. Employers across the U.S. shed 92,000 jobs in February, a sharp and unexpected blow to a labor market marked by rising unemployment over the past year as businesses grappled with economic challenges.

“We’re in a period of uncertainty, like 2025 on tariffs,” Oxford Economics senior US economist Matthew Martin told CBS News. “Companies weren’t sure what that policy, their cost structure would be, which caused them to delay hiring.”

The impact of the Iran war on hiring may not be immediately visible in the March jobs report, which will be released on April 3 at 8:30 am ET. Employers across the US probably added 60,000 jobs last month, up from January, according to the average estimate of economists compiled by FactSet.

“The March jobs report is likely to show lower gains due to continued health job strength,” Heather Long, chief economist at Navy Federal Credit Union, said in an email. Friday’s data release will be “too early to see the impact of the war in Iran.”

New economic conditions

As the war in Iran continues, businesses are facing new challenges due to higher transportation costs, while consumers are dealing with higher fuel costs that are weighing on them. Airlines are climbing faresand economists expect some food prices to rise because of the war’s effect on fertilizer supply.

Companies may delay hiring as they digest the impact of higher energy prices, said Martin of Oxford Economics. Unilever, for example, may be “looking for ways to cut costs” as it deals with higher production and distribution costs, as it faces uncertainty about how long the war in Iran could last, he added.

Rising energy prices could also hamper economic growth, which could translate into lower hiring, said Yelena Shulyatyeva, senior US economist at The Conference Board’s Center for Economics, Policy and Finance. However, oil prices would have to hit $140 a barrel – from the current Brent crude price of about $102 – for the US economy to slip into recession and negatively affect the labor market, according to his analysis.

“As the growth rate slows, the demand for new workers decreases,” he told CBS News. The Iran war “will probably worsen these lows, because companies don’t know what to expect. There is high uncertainty.”

High unemployment rate?

The unemployment rate could increase by 0.2 percentage points to 4.6% at the end of September, according to Goldman Sachs analysts. High oil prices often “reduce job growth and raise unemployment,” they wrote, adding that the arts and entertainment and lodging and food service industries are likely to reduce hiring.

This is mainly due to the financial impact on consumers, who spend a large part of their money on petrol, leaving them with little money to spend on other goods and services. Some consumers may cut back on non-essential purchases, while others may spend more cautiously while keeping their money safe, Martin said.

“Discretionary goods and services such as travel and luxuries will be the hardest hit as people cut back on essentials,” he said.