US jobless claims rose slightly last week, suggesting that while hiring has slowed, employers are still holding back from large-scale layoffs in an increasingly uncertain economic environment.
Data released by the Labor Department showed that initial claims for unemployment benefits rose to 210,000 in the week ending March 21, up from 205,000 a week earlier.
The figure matched economists’ expectations and remained within the relatively narrow 201,000 to 230,000 range seen so far this year.
Stable claims point to cautious employers
The modest increase in claims indicates a labor market that is cooling but not deteriorating sharply.
Employers appear reluctant to cut jobs aggressively, even as broader economic signals become more mixed.
Continuing claims, which reflect the total number of people receiving unemployment benefits, fell to 1.82 million in the week through March 14 from 1.85 million a week earlier.
That marks the lowest level for insured unemployment since late May 2024.
However, economists cautioned that the decline in continuing claims may partly reflect workers exhausting their eligibility for benefits, which typically last up to 26 weeks in most states, rather than a rapid improvement in job prospects.
Hiring momentum shows signs of weakness
While layoffs remain contained, hiring activity has slowed noticeably in recent months.
Economists attribute this to a combination of policy uncertainty and structural factors affecting labor supply.
Private nonfarm payrolls have averaged just 18,000 jobs per month over the three months through February, reflecting subdued demand for workers.
Analysts point to the impact of President Donald Trump’s aggressive import tariffs, which have dampened business confidence and hiring plans.
At the same time, tighter immigration policies have reduced labor supply, adding another layer of constraint to job growth.
Federal Reserve Chair Jerome Powell recently described the current environment as a “zero employment growth equilibrium,” warning that the balance carries a sense of downside risk.
Inflation concerns complicate outlook
The labor market outlook is also being shaped by rising inflation risks, particularly following the escalation of the US-Israel conflict with Iran.
Oil prices have surged more than 30% since the conflict began, raising concerns about broader price pressures.
Recent data showed increases in import and producer prices in February, and economists expect the effects of higher energy and fertilizer costs to feed into consumer inflation in the coming months.
As a result, forecasts for inflation this year have been revised upward, complicating the policy path for the Federal Reserve.
Earlier this month, the central bank kept its benchmark interest rate unchanged in the 3.50% to 3.75% range, while signalling only one potential rate cut this year.
Financial markets have since scaled back expectations for easing, reflecting concerns that inflation could remain elevated.
Mixed signals keep markets on edge
Despite the slight uptick in jobless claims, the overall picture of the labor market remains one of resilience, albeit with signs of strain beneath the surface.
The unemployment rate edged up to 4.4% in February from 4.3% in January, highlighting a gradual softening in labor conditions.
At the same time, certain segments of the workforce, such as recent college graduates without sufficient work history, are not fully captured in unemployment benefit data.
Economists and investors will be closely watching whether the recent surge in oil prices and ongoing geopolitical tensions begin to weigh more heavily on economic growth and, in turn, the labor market.
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