New federal data released Tuesday suggests the long-frozen U.S. job market may finally be loosening, but economists warn that rising energy costs tied to the war in the Middle East could quickly undercut those gains. The immediate question for workers and employers: will this tentative pickup hold if oil prices keep climbing?
After more than a year of minimal movement — few hires, few layoffs and muted voluntary departures — the Bureau of Labor Statistics reported a noticeable uptick in hiring in March. The headline figure: the national hiring rate rose to 3.5%, up from 3.1% in February, the fastest month-to-month increase in about two years.
Signs of thaw, but not a full rebound
Economists say the three-month average of the hiring rate, however, remains roughly where it started the year, suggesting the market may have reached a floor rather than begun a sustained climb. Matthew Martin, a senior U.S. economist at Oxford Economics, described the three-month trend as “essentially flat,” a sign that the decline in hiring seen over the past four years might have paused.
Hiring in March spread beyond health care for the first time in months, with notable gains in transportation and logistics, professional and business services, and hospitality. Employers added 178,000 jobs during the month — the largest monthly increase since 2024 — and the quits rate inched up to 2% from 1.9%, a modest rise that economists read as a small boost in worker confidence.
| Sector | Hires in March |
|---|---|
| Transportation, warehousing & utilities | 108,000 |
| Professional & business services | 165,000 |
| Accommodation & food services | 124,000 |
“We were in a very stagnant state, and those conditions are starting to loosen,” said Nicole Bachaud, a labor economist at ZipRecruiter, noting that greater clarity around tariffs and interest rates appears to be helping businesses make hiring decisions. Still, she and others cautioned that this recovery is fragile.
Energy shock threatens momentum
The factor most likely to derail progress is the sharp rise in fuel costs since the conflict escalated in the Middle East. Average U.S. gasoline prices climbed to about $4.45 per gallon as of Monday, up from roughly $2.94 on Feb. 23 — an increase of roughly 51% in about two months, according to the Energy Information Administration.
Higher fuel bills reduce household purchasing power and can cool consumer spending, which in turn influences employers’ willingness to hire. Oxford Economics’ Martin warned that businesses facing greater uncertainty are likely to scale back hiring plans, delaying any sustained rebound in the job market.
- For job seekers: Early signs point to more openings across sectors beyond health care, but competition and long spells of unemployment remain a hurdle.
- For employers: Firms may resume hiring if demand holds, yet rising energy costs and geopolitical uncertainty could prompt caution.
- For consumers: Higher fuel prices are already squeezing budgets and may translate into weaker retail and service activity if they persist.
There are less encouraging signals within the data as well. The share of unemployed people who have been out of work longer than six months rose to about 25% in March, up from roughly 18% in early 2023. Economists say that points to a segment of the labor force still struggling to regain a foothold in the market.
“Many jobless workers are encountering a low-hire environment and finding it difficult to get back in,” said Cory Stahle, a senior economist at Indeed. He added that, while the overall market has been relatively stable despite multiple headwinds, a prolonged conflict that keeps energy prices elevated would be a significant drag.
Ultimately, the latest federal reports offer cautious optimism: hiring appears to have stopped falling and has begun to spread across industries, but the labor market’s path forward now depends heavily on an external shock — the cost and availability of energy tied to the war. If prices moderate, the tentative thaw could firm into a genuine rebound; if they don’t, policymakers and business leaders may see any early gains evaporate.
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