Hiring Picks Up After A Long Freeze
New federal labor market data suggests the US job market may be starting to thaw after more than a year of weak hiring and limited worker movement. Economists say the latest figures offer encouraging signs, although the economic impact of the Iran war could slow or reverse that progress.
Heather Long, chief economist at Navy Federal Credit Union, said the data raises the possibility that the hiring recession may finally be ending. However, she warned that the war in Iran could halt the labor market’s much needed improvement.
A Low Hire, Low Fire Market Begins To Shift
For more than a year, the labor market has been stuck in a low hire, low fire pattern. Employers were not hiring aggressively, layoffs remained limited and workers were less willing to quit voluntarily. That created a frozen market with few opportunities for job seekers and new entrants.
This marked a sharp contrast with the great resignation period of 2021 and 2022, when job openings reached record highs and workers changed jobs at elevated rates. The latest data suggests that some of that stagnation may now be easing.
Hiring Rate Hits A Two Year High
The employer hiring rate rose to 3.5% in March 2026, up from 3.1% in February, according to the US Bureau of Labor Statistics. That was the fastest pace of hiring in two years and a potentially important signal that companies are becoming more willing to add workers.
Matthew Martin, senior US economist at Oxford Economics, said the three month average of the hiring rate is essentially flat from the start of the year. That suggests the rate may have found a bottom after four years of declines.
Hiring Broadens Beyond Healthcare
One of the most encouraging details was that hiring expanded beyond healthcare for the first time in a long period. Transportation, warehousing and utilities added 108,000 workers in March, while professional and business services hired 165,000 and accommodation and food services added 124,000.
Long said the data increasingly points to a labor market that may be stabilizing after a difficult year in which hiring outside healthcare was limited. The quits rate also edged up to 2% from 1.9%, a modest sign that workers may be regaining confidence in their ability to find new roles.
The Iran War Threatens Momentum
The main risk is the ongoing Middle East conflict, which has triggered an oil supply shock and sharply higher energy prices. Average US gasoline prices reached 4.45 dollars per gallon on Monday, up from 2.94 dollars on February 23, just before the war began.
Higher fuel prices can reduce household spending power and weaken consumer demand. Economists also warn that companies may delay hiring if uncertainty rises and cost pressures persist. Martin said the US Israel Iran war will test the labor market.
Job Seekers Still Face Headwinds
Despite stronger hiring data, some labor market signals remain concerning. The unemployment rate is still low by historical standards, but the share of long term unemployed workers has been rising. In March, about 25% of jobless workers had been unemployed for at least six months, up from about 18% in February 2023.
Cory Stahle, senior economist at Indeed, said many unemployed workers are still facing a low hire environment and struggling to find a path back into work. For investors and policymakers, the labor market now presents a mixed picture: hiring is improving, but higher energy prices, weaker spending power and war driven uncertainty could limit the recovery.
