US consumer confidence rises, but labour market cracks deepen as hiring hits six-year low

US consumer confidence rose modestly in March, but underlying labour market indicators painted a more troubling picture, with job openings declining sharply and hiring falling to its lowest level in six years—signalling growing economic strain amid high inflation expectations and geopolitical tensions.

Data released by the Conference Board showed its consumer confidence index edged up 0.8 points to 91.8 in March, defying expectations of a decline. However, the improvement masked mounting concerns among households about job availability and rising costs.

Consumers’ inflation expectations for the next 12 months climbed to 5.2 per cent, the highest since May 2025, reflecting the impact of surging fuel prices and tariff-driven cost pressures. The spike in energy costs follows the ongoing US-Israel conflict with Iran, which has pushed global oil prices sharply higher and lifted US gasoline prices above $4 per gallon for the first time in over three years.

“Cost of living remains front of mind for consumers,” Dana Peterson, chief economist at the Conference Board, told Reuters, noting persistent concerns around prices despite the headline uptick in confidence.

Labour market shows visible strain

Separate data from the Bureau of Labor Statistics underscored a weakening labour market. Job openings fell by 358,000 to 6.882 million in February, with declines concentrated among small and mid-sized businesses.

Sectors such as accommodation and food services, manufacturing, construction, and financial activities reported fewer vacancies, highlighting a broad-based cooling in labour demand.

More striking was the slump in hiring. Employers added 498,000 fewer workers during the month, bringing total hires down to 4.849 million—the lowest since March 2020 at the onset of the pandemic, and the weakest outside that period since 2014. The hiring rate dropped to 3.1 per cent from 3.4 per cent in January.

Layoffs and discharges also ticked up by 61,000 to 1.721 million, with the rate rising to 1.1 per cent, suggesting early signs of stress among employers.

Economists say policy uncertainty under Donald Trump—particularly around tariffs and immigration—has dampened both labour demand and supply, adding to business caution.

Uncertainty clouds outlook

The divergence between improving sentiment and weakening labour fundamentals points to fragility in the US economic outlook. While some consumers reported jobs as “plentiful,” the share describing employment as “hard to get” rose to its highest level since February 2021.

The labour market differential—a key gauge linked to unemployment—remained subdued at 5.8 per cent, far below 18.2 per cent a year earlier. The unemployment rate itself edged up to 4.4 per cent in February, with risks of further increases.

Jerome Powell recently described the labour market as being in a “zero-employment growth equilibrium” with downside risks—an assessment that appears increasingly aligned with incoming data.

The Federal Reserve has kept its benchmark interest rate steady at 3.50 per cent to 3.75 per cent, while signalling only one rate cut this year amid concerns over persistent inflation. However, economists warn that a combination of rising inflation expectations and softening employment could complicate the central bank’s policy path.

Spending risks emerge

Despite the slight improvement in confidence, consumers are turning more cautious on spending. The survey showed a shift towards reluctance in purchasing big-ticket items over the next six months, though interest in used cars, furniture, televisions, and smartphones remains relatively resilient.

Analysts warn that higher fuel costs, declining equity markets, and a cooling labour market could weigh on consumption—the key driver of US economic growth.

“The oil price move is demand-destructive as it reduces spending power for discretionary items,” ING’s James Knightley, told Reuters.

Financial markets, meanwhile, showed mixed signals. Wall Street stocks rose on hopes of easing geopolitical tensions, but major indices remained on track for steep monthly losses. The dollar weakened, while US Treasury yields declined, reflecting investor caution.