A “Help Needed” sign hangs in the window of a restaurant in Medford, Massachusetts, on January 25, 2023.
brian snyder reuter
Nonfarm payrolls are expected to recover — just barely — in March as the bar for a healthy labor market continues to get lower.
The U.S. economy is expected to add 59,000 jobs in the month, an anemic figure by the standards of previous years this decade, but enough to keep the unemployment rate at 4.4%.
If this estimate is reasonably accurate, it would actually mean above-trend job growth in a labor market where virtually no jobs have been created over the past year.
Immigration restrictions, demographic shifts and geopolitical uncertainty have made companies reluctant to hire or fire workers in large numbers, resulting in a stagnant labor market and a series of rough monthly counts released by the Bureau of Labor Statistics. The BLS will release the numbers at 8:30 a.m. ET on Friday, when the stock market will be closed for the Good Friday holiday.
“We need to rethink how we think employment numbers are good and bad,” said Guy Berger, chief economist at Homebase, which provides workforce management services to small and medium-sized businesses.
He added that a report like February’s showing job losses “would have sounded the alarm about the state of the labor market.” “Now we’re thinking, ‘Oh, that was a really bad report,’ but it doesn’t make anyone nervous about the job market. I didn’t look at that report and think, wow, we’re heading into a recession.”
Unemployment rate outlook
Berger echoed the views of Federal Reserve Chairman Jerome Powell and other central bankers who said they are placing more emphasis on the unemployment rate as a measure of labor market stability.
As the workforce changes, wage increases will need to be kept in check more than ever in order to stabilize the unemployment rate. Despite slow employment growth, the current unemployment rate is 4.4%, just 0.2 percentage points higher than a year ago.
In a recent report, the St. Louis Fed updated previous research on breakeven levels for job growth. Economists at the bank now believe that number could be as low as 15,000 and as high as 87,000.
This is a significant decrease from the estimate as of April 2025, when the break-even level was 153,000 people, and the latest information from August of the same year, which put the figure between 32,000 and 82,000 people.
In other words, the labor market does not require as much employment growth as was previously required to bring the population closer to full employment.
“Things have been slowly deteriorating over the last few years,” Berger said, but added: “There are no real signs that we are heading into a recession.”
Some Wall Street economists disagree. In recent days, Goldman Sachs, Moody’s Analytics and others have raised the odds of a recession over the next 12 months, highlighting threats from a slowing employment situation and rising energy costs.
Earlier this week, BLS data showed employment as a percentage of the labor force fell to 3.1%, the lowest level since the 2020 coronavirus recession and before that, January 2011.
proceed slowly
Still, Homebase’s data is consistent with other indicators, such as the ADP Private Payroll Report for March, which shows a slight increase in pay. The 92,000 job losses in February were due in part to the subsequent resolution of a strike at Kaiser Permanente, a health care provider that laid off about 31,000 workers in California and Hawaii.
The economy has relied heavily on health care for job growth. In fact, without this sector, there would have been a net loss of more than 500,000 jobs over the past year.
ADP reported Wednesday that private payrolls rose by 62,000 jobs, slightly above market expectations, with most of the growth coming from health care, which added 58,000 jobs.
Nela Richardson, chief economist at ADP, said even this number hides fundamental weaknesses.
“The question is whether the economy will grow more or not, because many of these jobs are low-wage home health aide jobs,” she said. “They are not full-time, full benefits, 401(k) jobs that support consumer spending.”
EY Parthenon is among Wall Street firms that have raised their recession forecasts. Lydia Bousseur, senior economist at EY Parthenon, said health care “will be a key focus of the report”.
“As labor supply remains historically tight, we expect a near-frozen labor market in 2026 due to hiring selection, wage growth compression, and strategic workforce realignment,” Boussour said in a note. “Risks are weighted to the downside given the ongoing conflict in the Middle East and the 40% probability of recession.”
