Hiring rate slowed before the Iran war
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Hiring was anemic and new job opportunities were more scarce in February, a painful combination for American workers.
Why it matters: New data Tuesday morning confirms that the labor market appeared to be losing altitude before the Iran conflict added a new layer of uncertainty.
- The weakening jobs market is happening alongside evidence that the Federal Reserve might have less room to maneuver. Rate cuts to cushion any slowdown risk stoking the inflation that tariffs and the war's energy shock are already reigniting.
What they're saying: The jobs market "was stuck in neutral going into this conflict. Getting it into gear just got harder," Laura Ullrich, director of economic research at hiring site Indeed, wrote in a note.
By the numbers: Job openings fell by 358,000 in February, all but erasing the surge in vacancies seen the prior month. The rate of job openings in the private sector is 4.4%, falling back to the low seen in November 2025.
- Hiring was dismal, with few places to hide. The number of hires fell to 4.8 million in February, down almost half a million from January.
- The hiring rate is 3.1%, the lowest since April 2020, when the economy came to a standstill at the onset of the COVID-19 pandemic.
- Excluding the depths of the early pandemic period, the hiring rate is the lowest in more than 15 years — since January 2011.
Yes, but: The doom and gloom on the hiring and job-finding side of the equation was not accompanied by a rapid surge in layoffs.
- The layoff rate ticked up 0.1 percentage point, to 1.1%, roughly in line with the pace of firings in the year preceding the pandemic.
- It's also a few ticks above the all-time low layoff rate of 0.9% seen in the job market boom years of 2021 and 2022.
Zoom out: That might be cold comfort to those looking for new jobs with higher pay or incoming labor market entrants.
- "It's a time of very low job creation," Fed chair Jerome Powell told Harvard University students Monday. "The unemployment rate is very low, but that doesn't help you when you're coming into that kind of market."
- "There's no denying that it's a challenging time to enter the labor market."
What to watch: The data comes ahead of Friday's jobs report, the first that will capture any hiring effects from the Middle East conflict.
- It also comes at a crucial time for Fed officials, who are assessing how the balance of risks — sticky inflation versus weakening labor market — might be shifting under the central bank's feet.
- Economists anticipate that the labor market added about 60,000 jobs in March, recovering from the effects of bad weather and a health care strike that put downward pressure on February hiring.
- The unemployment rate is expected to hold at 4.4%.
