WASHINGTON (AP) — The U.S. job market likely rebounded last month from a dismal February. But the improvement may not last long as the American economy absorbs fallout from the Iran war and a surge in oil prices.
The Labor Department is expected to report Friday that companies, government agencies and nonprofits added 60,000 jobs in March after shedding 92,000 in February, The unemployment rate is expected to stay at a healthy 4.4%, according to a survey
of forecasters by the data firm FactSet.
U.S. payrolls were probably lifted last month by warmer weather and the return of 31,000 Kaiser Permanente employees to work after the end of a strike in February.
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, expects the Iran war – and the resulting surge in oil and gasoline prices – to weaken the job market. But “the impact of the war might not be felt for some time,’’ she wrote in a commentary. Changes in businesses’ plans to hire and invest will take time to show up in the economic data.
Moreover, big income tax refunds this spring will keep consumers spending and drive economic activity. But, she added, “another month or two of reasonably good labor market and economic data won’t be a reason to conclude that the economy isn’t facing downside risks related to the war.’’
Adam Schickling, senior economist at the investment firm Vanguard, now expects U.S. unemployment to rise to 4.6% at year’s end; before the Iran war, he’d expected joblessness to dip to 4.2%.
The American job market is already in a slump.
Last year, employers added an average of just 9,700 jobs a month, the weakest hiring outside a recession since 2002. Businesses have been reluctant to bring on new workers partly because of uncertainty arising from President Donald Trump’s trade and immigration policies. One measure released by the Labor Department on Monday showed the weakest hiring since April 2020 – in the middle of COVID-19 lockdowns.
But firms have also been reluctant to let go of their existing employees, creating what economists describe as a “no-hire, no-fire’’ scenario that locks young applicants out of the job market. At the same time, there are growing worries that artificial intelligence is taking entry-level jobs.
New jobs are heavily concentrated in health care and social assistance (which includes daycare and vocational rehabilitation centers). Excluding that category, all other private sector employers collectively cut 285,000 jobs over the past year.
Vanguard’s Schickling expects healthcare and social assistance to account for 45% of hiring over the next four years, versus a historical average of just 20%. The trend reflects an aging U.S. population. A graying Japan saw the same thing in the early 2010s, Schickling wrote in a commentary.
