More Americans applied for unemployment benefits last week, but the overall labor market continues to show stability with layoffs remaining relatively low despite uncertainty linked to the Iran war, AP reported.
According to the United States Department of Labor, initial jobless claims rose to 215,000, up from 210,000 the previous week. The four-week moving average also increased by about 6,300 to 209,000, helping smooth out short-term fluctuations in the data.
“Initial claims are still impressively low, near historic lows,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a commentary. “The uptick from last week to this week is trivial in a labor market of 159 million workers.″
The number of Americans filing for unemployment benefits—a key indicator of layoffs—has remained largely stable in a low range of about 200,000 to 250,000 per week since the U.S. economy recovered from the brief but severe pandemic recession in 2020.
The total number of people receiving unemployment aid also increased by 15,000, reaching 1.79 million for the week ending May 16. This consistently low level of claims indicates that most employers in the United States are not significantly cutting jobs.
However, while layoffs remain limited, hiring activity has also been weak. Employers, including companies, nonprofits, and government agencies, added fewer than 10,000 jobs per month last year, marking the weakest hiring pace outside of recession periods since 2002.
Job creation has picked up a bit so far this year — to an average of 76,000 a month from January through April. By contrast, employers added 122,000 a month in 2024 and averaged nearly 400,000 a month from 2021 through 2023 as the economy roared back from COVID-19 lockdowns.
The now requires fewer new jobs to keep the unemployment rate from increasing. This is partly due to factors such as tighter immigration policies under President Donald Trump and the continued retirement of Baby Boomers, both of which are reducing the pace of labor force growth. As a result, the monthly “break-even” level of job creation needed to maintain a stable unemployment rate may be as low as zero.
Despite slower hiring dynamics, the unemployment rate has remained relatively low by historical standards, standing at 4.3% in April, indicating that overall labor market conditions remain steady even with subdued job growth.
As reported by AP, the has clouded the economic outlook as higher energy prices squeeze consumers and businesses. Iran responded to U.S. and Israeli attacks by turning to economic warfare — closing the Strait of Hormuz, through which a fifth of the world’s oil passes, and causing the biggest disruption of global oil supplies in history. In response, U.S. gasoline prices have surged to an average of $4.43 a gallon from an average $2.98 a gallon on the eve of the conflict, according to AAA.
(With inputs from AP)
