Key Points

  • Data released by the U.S. Bureau of Labor Statistics on Tuesday showed that hiring accelerated in March and job openings remained stable, easing concerns from previous months about a weakening labor market.
  • Compared with February, hiring surged by 655,000 in March to 5.6 million, with the hiring rate rising to 3.5%. The Bureau of Labor Statistics noted that gains in transportation, warehousing, and utilities offset February's decline. Job openings held steady at 6.9 million, unchanged from the previous month.
  • Despite the positive data, Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said businesses are not digging deep into the labor market. In a report, he said the report "undermines the theory that labor demand is picking up," noting that job openings in March were 3% below the average level of last year.

Deeper Analysis

Amid signs of continued labor market softening, U.S. Labor Department data showed that layoffs and discharges in March increased by 153,000 compared with February.

Meanwhile, the quits rate—the proportion of workers who voluntarily left their jobs—rose 0.1 percentage point to 2%, suggesting workers' confidence in finding new jobs has slightly increased.

This job openings report aligns with the Bureau of Labor Statistics' broader March report, which showed the unemployment rate fell to 4.3%, while job growth, though below 2025 gains, unexpectedly rebounded to 178,000.

The data corroborates the view of many economists that the labor market is in an unusual state of "low hiring, low layoffs" equilibrium.

Federal Reserve Chair Jerome Powell said on April 29: "A large part of the slowdown in employment growth over the past year reflects a decline in labor force growth, stemming from reduced immigration and lower labor force participation, although labor demand has also clearly softened." Powell made these remarks after policymakers decided to hold the federal funds rate in the 3.5% to 3.75% range.

Powell said that given current borrowing cost levels, Fed officials are well positioned to lower the benchmark rate to stimulate labor demand if unemployment rises, or to raise rates if inflation shows signs of accelerating.

"The good news is that we feel our policy stance is in a very good place to wait and see," he said at a press conference, while noting that uncertainty over the duration of the Iran conflict casts a shadow over inflation path forecasts.

Powell said: "The labor market is showing increasing signs of stabilization, while inflation is somewhat 'undisciplined,' so perhaps slightly tighter policy, or being at the high end of the neutral rate range, would be just right."

The April jobs report is scheduled for release on Friday.