The latest U.S. labor market data is sending positive signals, suggesting that the long-frozen job market may be beginning to thaw. However, several economists warn that soaring energy prices and economic uncertainty triggered by the conflict with Iran could quickly drag down this hard-won recovery.

"Is the hiring slump finally over? There are some encouraging signs now," said Heather Long, chief economist at Navy Federal Credit Union. She also noted, "The biggest concern is that the conflict in Iran could disrupt much-needed progress in the labor market."

The job market is showing signs of recovery after a prolonged freeze.

For more than a year, the U.S. labor market has been in a stalemate of "low hiring, low layoffs." Low hiring rates, limited layoffs, and few voluntary departures have resulted in scarce opportunities for job seekers and new entrants to the labor market. This situation contrasts sharply with the "mass resignation" period of 2021-2022, when record-breaking job openings led to a large-scale exodus of employees seeking better opportunities.

ZipRecruiter labor economist Nicole Bachaud believes that the recent rebound in market activity is likely a result of businesses becoming more certain about the outlook for economic policies such as tariffs and interest rates, which has boosted their willingness to hire.

Data released by the U.S. Bureau of Labor Statistics on Tuesday (May 5) showed that the employer hiring rate rose to 3.5% in March 2026, the fastest growth in two years, significantly higher than the 3.1% in February.

In a research report on Tuesday, Matthew Martin, senior U.S. economist at Oxford Economics, pointed out that the three-month moving average hiring rate is "basically flat at the beginning of the year, suggesting that the job market may have bottomed out after four consecutive years of decline."

Lang specifically emphasized that several sectors outside of healthcare saw hiring growth, marking the first such increase in a considerable period. According to the Bureau of Labor Statistics, the transportation, warehousing, and utilities sector added 108,000 jobs in March, professional and business services added 165,000, and accommodation and food services added 124,000.

He wrote, “After a tough year with virtually no hiring outside of healthcare, the labor market looks increasingly stable.”

Employee turnover rate rebounded slightly, and new job creation data improved.

Data from the Bureau of Labor Statistics shows that the voluntary turnover rate rose slightly to 2% in March from 1.9% in February. Economists generally believe that the voluntary turnover rate is a rough indicator of employees' confidence in finding a better job, because most people choose to leave their current job only after securing a new position.

Another Bureau of Labor Statistics report shows that although 2025 was the worst year for job growth among non-recession years, employers still added 178,000 jobs in March 2026, the highest monthly increase since 2024.

Bajode stated, "I think the labor market is recovering. We were in a very frozen, stagnant state before, but now these conditions are starting to ease and gradually improve."

The Iranian conflict is putting pressure on oil prices and adding uncertainty to the recovery outlook. Despite signs of recovery, the potential impact of the Iranian conflict on the labor market has become a focus of economists' attention. The ongoing Middle East conflict has triggered tight oil supplies, leading to a significant rise in energy prices.

According to data from the U.S. Energy Information Administration, as of Monday, the average gasoline price in the United States had risen to $4.45 per gallon, an increase of about 51% from pre-war February 23 ($2.94 per gallon), a staggering increase in just two months.

Martin points out that while Tuesday's labor market data "is too early to show the negative spillover effects of the war," high oil prices are weakening household spending power and could reduce overall consumer demand. He further analyzes that due to increased uncertainty, "companies are likely to further scale back their hiring plans, thus delaying a sustained rebound in hiring rates." He concludes, "The conflict between the US and Israel and Iran will test the labor market."

Rising long-term unemployment rates continue to pose challenges to market stability.

Economists also caution that some concerns remain regarding the job market. For example, while the overall U.S. unemployment rate is at a historically low level, the proportion of long-term unemployed individuals is gradually increasing. Data from the Bureau of Labor Statistics shows that in March 2026, approximately 25% of the unemployed will be long-term unemployed (unemployed for at least six months), up from a recent low of approximately 18% in February 2023.

Cory Stahle, a senior economist at Indeed, said: "Many unemployed people are facing a low hiring environment and are trying to get back into the labor market, only to find that the path to re-entry is not smooth."

Starr believes that, overall, job seekers face a situation of both optimism and anxiety. Despite multiple external headwinds, the US job market has demonstrated a "remarkable resilience." However, he also warns: "The longer the conflict lasts, the greater the drag on the economy will be."

The prospects for employment recovery still need to be observed.

Overall, after a prolonged period of stagnation, the US labor market is showing initial signs of stabilization and recovery. Rising hiring rates, increased job creation in some industries, and a slight recovery in employee confidence are all contributing to some optimistic market expectations. However, the high oil prices and economic uncertainty stemming from the conflict with Iran cast a shadow over the path to recovery.

In the coming period, the trajectory of the job market will depend not only on domestic policy adjustments but also significantly on international geopolitical conflicts. Job seekers, businesses, and policymakers all need to closely monitor subsequent data changes to better address potential risks.