A “Help Wanted” sign hangs in restaurant window in Medford, Massachusetts, U.S., January 25, 2023.
Brian Snyder | Reuters
Nonfarm payrolls are expected to bounce back — barely — in March as the bar keeps getting lower for what constitutes a healthy labor market.
The U.S. economy is projected to show job gains of 59,000 for the month, an anemic rate by the standards of previous years this decade but enough to keep the unemployment rate at 4.4%.
If the estimate is reasonably accurate, it actually would represent above-trend job growth for a labor market that has created virtually no jobs over the past year.
Immigration restrictions, shifting demographics and geopolitical uncertainty have left companies eager neither to hire nor fire workers en masse, resulting in a static labor market and a series of ho-hum monthly counts from the Bureau of Labor Statistics. The BLS will release the number Friday at 8:30 a.m. ET, though the stock market will be closed in observance of the Good Friday holiday.
“We have to revise our idea of what a good or bad job number is,” said Guy Berger, chief economist at Homebase, which provides workforce management services for small businesses.
A report like February’s showing job losses “would have been raising alarm bells about the state of the labor market,” he added. “Now we’re like, yeah, that was a very bad report, but it doesn’t freak anybody out about the job market. I didn’t look at that report and say, wow, we’re on the verge of tipping into recession.”
Jobless rate in view
Echoing views expressed by Federal Reserve Chair Jerome Powell and other central bankers, Berger said he’s more focused on the unemployment rate as a gauge of labor market stability.
With the changes to the workforce, it’s requiring ever-smaller payroll growth to keep the jobless rate steady. The current unemployment rate of 4.4% is just 0.2 percentage point above where it was a year ago, despite the anemic payrolls growth.
In a recent report, the St. Louis Fed updated previous research on the breakeven level for job growth. The bank’s economists now think that number could be as low as 15,000, with a high end of 87,000.
That’s a steep drop from an estimate as recent as April 2025 that showed the breakeven level at 153,000, and an update in August of that year putting the number between 32,000 to 82,000.
In other words, the labor market needs nowhere near the job growth it required previously to keep the population near full employment.
“Things have been slowly getting worse each for the last few years,” Berger said, but added, “There’s no real sign of us tipping into a recession.”
Some economists on Wall Street disagree. Goldman Sachs, Moody’s Analytics and others in recent days have raised their odds of recession in the next 12 months, with a focus on threats from a slowing jobs picture and surging energy costs.
Earlier this week, BLS data showed that the rate of hiring as a share of the workforce fell to 3.1%, its lowest level since the Covid recession in 2020 and, before that, January 2011.
Slow going
Still, Homebase’s data is consistent with other indicators, including the ADP private payrolls report for March, showing modest gains in payrolls. February’s loss of 92,000 jobs came in part due to a since-resolved strike at health-care provider Kaiser Permanente that sidelined some 31,000 workers in California and Hawaii.
The economy has relied heavily on health care for job growth. In fact, without the sector, over the past year there would have been a net loss of more than half a million jobs.
ADP reported Wednesday that private payrolls rose by 62,000, a bit above market expectations, but almost all the growth came from health care, which saw a gain of 58,000 jobs.
Even that number masked underlying weakness, ADP’s chief economist, Nela Richardson, said.
“Is that the economy that pushes growth forward is the question, because a lot of these jobs are low-paying home health-care aide jobs,” she said. “They are not the full-time, full-benefits, 401(k) jobs that help support consumer spending.”
EY-Parthenon is among the Wall Street firms that raised its recession forecast. Lydia Boussour, senior economist at EY-Parthenon, said health care “will be a key focus in the report.”
“We anticipate a largely frozen labor market in 2026, with selective hiring, compressed wage growth and strategic workforce resizing as labor supply remains historically strained,” Boussour said in a note. “Risks are weighted to the downside given the ongoing Middle East conflict, with recession odds at 40%.”
