The number of Americans filing new claims for unemployment benefits fell last week, pointing to continued resilience in the labour market even as businesses remain cautious about hiring amid rising geopolitical risks.
Initial claims for state unemployment benefits dropped by 11,000 to a seasonally adjusted 207,000 for the week ended April 11, according to data released by the Labor Department on Thursday.
The reading came in below economists’ expectations of 215,000, suggesting layoffs remain subdued.
Claims have largely held within a narrow range of 201,000 to 230,000 so far this year, underscoring a steady labour market environment despite broader economic uncertainties.
Hiring cautious despite low layoffs
While layoffs remain low, economists say hiring activity has slowed, reflecting a more cautious stance among employers.
The labour market has been in a period of relative equilibrium, with both hiring and workforce growth moderating in tandem.
The Federal Reserve’s latest Beige Book report highlighted this cautious sentiment, noting that firms are increasingly turning to temporary or contract workers instead of committing to permanent hires.
Businesses cited uncertainty linked to the Middle East conflict as a key factor influencing hiring, pricing and investment decisions.
The report noted that many companies have adopted a wait-and-see approach as geopolitical tensions complicate the economic outlook.
Oil price shock adds to uncertainty
The conflict involving the US, Israel, and Iran has added a fresh layer of uncertainty to the economic environment, particularly through its impact on energy markets.
Oil prices have surged more than 35% since the war began in late February, pushing up both consumer and producer prices in March.
The increase has been exacerbated by the blockade of the Strait of Hormuz, a critical shipping route for global oil supplies.
Higher energy costs are widely seen as a headwind for economic activity, raising concerns about consumer spending and business investment in the months ahead.
Continuing claims rise as re-employment slows
Further signs of a cooling hiring environment were evident in continuing claims data, which reflects the number of people receiving unemployment benefits after their initial claim.
Continuing claims rose by 31,000 to 1.818 million in the week ended April 4, indicating that unemployed workers may be taking longer to find new jobs.
However, the data may also be influenced by structural factors, including the expiration of benefits for some claimants.
In most states, unemployment benefits are limited to 26 weeks, and individuals who exhaust their eligibility are no longer counted in the data.
The figures also exclude certain groups, such as younger workers with limited employment history, who continue to face a challenging job market.
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