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New applications for U.S. unemployment benefits declined last week, pointing to continued stability in the labor market, even as broader economic risks tied to geopolitical tensions remain in focus.
According to the US Department of Labor, initial jobless claims fell by 9,000 to a seasonally adjusted 202,000 for the week ended March 28. The reading came in below expectations of 212,000, reinforcing the view that layoffs remain limited.
Labor Market Remains Stable but Sluggish
Jobless claims have largely stayed within a narrow range of 201,000 to 230,000 this year, reflecting what economists describe as a “low hire, low fire” environment. While layoffs remain subdued, hiring activity has also been relatively weak.
Private-sector job growth has averaged just 18,000 positions per month over the three months through February, signaling a slowdown in employment momentum.
Several factors have contributed to the muted hiring environment, including ongoing uncertainty linked to trade policies under Donald Trump and tighter labor supply conditions driven by stricter immigration policies.
Geopolitical Risks Add New Uncertainty
Economists have also highlighted the growing impact of the Middle East conflict on business sentiment. The ongoing war has introduced additional uncertainty, particularly as rising oil prices—up more than 50% in recent weeks—fuel concerns about inflation and operating costs.
U.S. gasoline prices have climbed above $4 per gallon for the first time in over three years, adding pressure on both consumers and businesses.
While forecasts suggest that job growth may have rebounded by around 60,000 in March, some analysts caution that any improvement could be temporary if geopolitical tensions persist.
Mixed Signals from Broader Labor Data
Recent labor market data presents a mixed picture. Nonfarm payrolls fell by 92,000 in February, partly due to temporary factors such as healthcare strikes and severe weather. The unemployment rate is expected to remain steady at 4.4%.
Meanwhile, continuing claims—seen as a proxy for hiring conditions—rose by 25,000 to 1.841 million in the week ended March 21, indicating that it may be taking longer for unemployed individuals to find new jobs.
Additional data from the Bureau of Labor Statistics showed a sharper-than-expected decline in job openings in February, with hiring falling to its lowest level in nearly six years.
Focus Turns to Key Employment Report
Markets are now awaiting the release of the March employment report, which is expected to provide a clearer picture of labor market conditions and help shape expectations for monetary policy.
Outlook
While low jobless claims suggest that layoffs remain under control, the broader labor market appears to be losing momentum. Combined with rising geopolitical risks and inflationary pressures, the outlook remains uncertain, with potential downside risks emerging in the months ahead.
