The Labor Market's Vibe Check

March jobs report shows mixed signals with the number of jobs added exceeding expectations, slight unemployment increase, and sentiment declining across multiple indicators despite a resilient labor market.

Key Takeaways

• The labor market remained stable with the latest JOLTs update. Job openings, hires, and quits remained mostly unchanged. 
• Today’s B.L.S. report surpassed expectations, with 228,000 jobs added.
• According to the Challenger Report, U.S. employer layoffs rose 60% month-over-month, driven almost entirely by the Department of Government Efficiency (DOGE). Unemployment climbed slightly to 4.2%. 
• Tariff uncertainty makes planning difficult for businesses and consumers and may cause a short-term drag on the labor market. 
• Sentiment is down across multiple key indicators, including job seekers, employees, consumers, and some business leaders. 
• Recruiting remains highly competitive—especially in healthcare and other supply-constrained sectors.

April 4 Report Better Than Expected

Today’s labor market update shows job gains at 228,000, higher than the monthly average of 158,000 over the prior 12 months. Unemployment ticked up one notch but remains low. In March, 232,000 people began looking for work, which drove the rate up slightly. Revisions for January and February employment gains were noted, with totals coming in 48,000 lower than previously reported. 

Healthcare continues to dominate job growth, which is a trend expected to continue as the population ages. With healthcare spending high and more people with coverage, demand will only continue to increase. Given supply constraints in this area, recruitment costs and difficulty are expected to remain high for this category.

Layoffs Mostly Driven by DOGE Cuts

Each month, Challenger, Gray, and Christmas release the Challenger Report, noting layoffs across U.S. employers. The chart below notates a 60% increase in layoffs from the month prior. March was the third highest month for layoffs ever recorded, behind two other months in 2020 during the beginning of the pandemic.

The good news for the broader labor market is that layoffs were largely confined to the federal government and the retail sector, which cut nearly 60,000 jobs in Q1.

Retail Sales to Hold Steady

Despite an uptick in retail layoffs in Q1, the National Retail Federation, which announced its annual sales forecast this week, predicts that annual sales growth will fall in line with the last few years. The sector will closely watch four key things over the year: de-regulation, immigration, tariffs, and tax cuts. In the long term, de-regulation may help offset some of the costs retailers expect to rise this year, but those offsets may not be observed in 2025. In the more immediate future, what is certain is that consumers will be price-sensitive.

The slower flow of immigrants in the labor market may make retail labor more expensive as wages drive up due to supply constraints. These wage hikes may be passed on to consumers, who should also be prepared to foot the bill for tariffs in some cases. This comes at a time when pandemic savings are exhausted and loan delinquencies are trending up.

From an employer perspective, companies should expect recruiting to remain competitive in areas like retail, food service, hospitality, and other immigrant-heavy job categories as the immigrant supply continues to dwindle.

Liberation Day Drives Uncertainty

This week's most notable update is likely related to tariffs announced on April 2, “Liberation Day.” The uncertainty around tariffs makes it very difficult to know their impact, but some data suggests that the typical household should plan for an increase of up to $4,200 more per year.

These increases could cause a drag on the labor market in the short term. As consumers lose purchasing power and spend less, some companies may need to cut their workforce to stay competitive. Due to the uncertainty, business investments may also slow, which could slow hiring plans. 

In the longer term, tariffs could spark a revitalization of American manufacturing. While this news is positive, labor supply within manufacturing cannot be ignored. There is already a projected shortage of 2.1 million manufacturing workers by 2030. Recruiting in this area is expected to remain competitive for the long haul.

The Market Mood: What Job Seekers, Workers, and Leaders Are Telling Us

Consumer Sentiment

Every month, the Conference Board releases its latest data on consumer confidence. The release on March 25 indicated consumer expectations fell to a 12-year low, to 65.2, which is well below the threshold of 80 that typically signals a recession may be ahead. It is worth noting that views of the current labor market saw a slight improvement in March compared to February. 

Job Seeker Sentiment

As reported quarterly by ZipRecruiter, job seeker sentiment aligns with the falling consumer sentiment noted above. Sentiment fell in Q1 by 3.6 points, which erased any gains from 2024. Declines were twice as steep for women compared to men and more than twice as steep among Asian and Hispanic job seekers. The percentage of job seekers who received zero offers in the last month increased to 61%, up from 56% last quarter. The delay in finding work trickles down to spending power, with 23% of job seekers reporting serious financial difficulties, up from 20% last quarter.

Despite sentiment declines among job seekers, we see trends in job seekers adapting and remaining resilient. Job seekers are leaning into upskilling and pursuing gig or shift-based work while searching for employment. 

Employee Confidence

Employee confidence hit an all-time low last month, mirroring consumer and job seeker sentiment declines, according to Daniel Zhao, Lead Economist at Glassdoor. Glassdoor measures confidence based on the percentage of employees who believe their employer has a positive outlook for the next six months, which dropped to 44.4% in February. This decline may be driven by uncertainty and economic concerns, with increasing mentions of layoffs, inflation, and recession in employee reviews over the past month.

CEO Sentiment

While job seekers, employees, and consumers report sentiment declines, CEOs report more optimism. The Conference Board’s Q1 CEO Confidence Report shows sharp increases in sentiment. In fact, 56% of CEOs report expecting economic conditions to improve over the next six months, up from 33% in Q4. From a recruiting perspective, 32% of CEOs report plans to grow their workforce this year. 

Looking Ahead: The 2025 Forecast

While sentiment is trending down across consumers, job seekers, and employees, this shift may reflect a short-term recalibration rather than a long-term cause for concern. As hiring slows in some areas, we expect companies to double down on retention, workplace well-being, and internal mobility.  We also expect companies to continue to push forward with growth initiatives in other areas while remaining cautious and agile.

“Employers are pushing ahead with growth-focused investments in talent and adapting to macroeconomic uncertainty. From our view, any signs of decline should be seen as more of a short-term adaptation rather than a long-term cause for concern.” Adam Stafford, CEO Recruitics

The road ahead may be cautious, but data from this week’s JOLTs and BLS reports point to a resilient labor market. Recruiting will remain competitive, and employers should double down on their value proposition to attract qualified talent and stand out.

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