Hiring is likely to have remained robust in March, showing the economy continues to improve at a time when concerns about the Russia-Ukraine war and high inflation have muddled the outlook. 

Economists surveyed by Bloomberg estimate that the Labor Department report will show employers added 423,000 nonfarm payrolls this month, compared with a higher-than-expected 678,000 in February. The economists forecast that the unemployment rate edged lower to 3.7%, which would be the lowest level since the coronavirus pandemic began. 

“I expect to see another blockbuster report despite everything that’s going on in the world,” said Julia Pollak, the chief economist at ZipRecruiter, a career site. “The labor market remains in a very good place.” 

The economic recovery has gained steam over the past year, with gross domestic product rising rapidly. Since last spring, U.S. employers created more than 400,000 jobs each month. But the outlook has turned cloudier in recent weeks. 

The Russian invasion of Ukraine has fanned inflation, which soared to its highest level since 1983. Anticipated war-related shortages have pushed the prices of energy and other commodities sharply higher, slowing consumer spending in February. In an effort to curb the rapid price increases, the Federal Reserve this month raised borrowing costs for the first time in three years.

“This report is coming at a time when the Fed is starting to hike rates and there are storm clouds on the horizon,” said Daniel Zhao, a senior economist at the career site Glassdoor.

That could add to challenges in the job market, where there has been an uneven recovery from the pandemic. Minority workers have lagged behind, with Black Americans facing an unemployment rate of more than 6% in February. 

The job report’s labor force participation rate — a measure of the proportion of potential workers with a job or in search of one — will be closely watched for signs of whether employers were able to lure Americans from the sidelines in March. In February, the labor force participation rate rose but held stubbornly below pre-pandemic levels.

The number of job openings remained near record levels at 11.3 million in February, according to the most recent Job Openings and Labor Turnover Survey, and 4.35 million workers quit their jobs. 

Economists will look for job gains in the leisure and hospitality sector, which was hit particularly hard as Americans spent money on goods instead of services throughout the pandemic. 

State and local government jobs have also struggled to recover. The public sector has recovered about half of the jobs it lost to the pandemic, according to ZipRecruiter, while the private sector has regained roughly 93%.

“That’s sort of a concerning indicator,” said Elise Gould, a senior economist at the Economic Policy Institute. “It hasn’t moved enough.”

While the labor shortage has pushed wages higher, they have continued to trail far behind inflation. 

After a near standstill a month earlier, economists forecast that average hourly earnings inched 0.4% higher in March, which would bring annual gains to 5.5%. In February, the Personal Consumption Expenditures Index, the Fed’s preferred measure of inflation, jumped 6.4% from a year earlier.

More Americans are expected to be drawn back to the labor market as coronavirus cases recede. But as workers begin to fill the millions of open positions, employers will face less pressure to hike wages.

“I think the wages that they’ve seen will not be sustained,” Gould said. “They won’t be sustained because workers don’t really have a way to lock them in.”

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