US weekly jobless claims fall as layoffs remain low

[WASHINGTON] New applications for US unemployment benefits fell last week amid low layoffs, suggesting labour market conditions remained calm in March, though economists have warned that a prolonged war in the Middle East posed a downside risk.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 202,000 for the week ended March 28, the Labor Department said on Thursday (Apr 2).

Economists polled by Reuters had forecast 212,000 claims for the latest week. Claims have moved in a 201,000-230,000 range this year, consistent with what economists describe as a “low hire, low fire” labor market. They have blamed the labour market stagnation on lingering uncertainty caused by President Donald Trump’s aggressive import tariffs.

Private nonfarm payrolls have averaged growth of only 18,000 jobs per month in the three months through February. Reduced labour supply because of the Trump administration’s hard-line immigration policy was also hampering job growth, economists said. The month-long US-Israel war with Iran has also added another layer of uncertainty for businesses. Trump on Wednesday vowed more aggressive strikes on Iran.

Though job growth likely rebounded by 60,000 in March, according to a Reuters survey of economists, some warned the reversal could be temporary because of the conflict, which has sent global oil prices soaring more than 50 per cent. The national average retail gasoline price this week topped US$4 a gallon for the first time in more than three years.

Nonfarm payrolls dropped by 92,000 jobs in February partly because of a strike by healthcare workers and harsh weather. The unemployment rate is forecast to have held steady at 4.4 per cent.

The Bureau of Labor Statistics will release March’s employment report on Friday. Good Friday is not a federal holiday in the United States.

“We do expect it (war) to delay the modest improvement we expected in the labour market this year, as uncertainty, a slowdown in consumer spending and rising costs cause businesses to put hiring on hold,” said Nancy Vanden Houten, lead US economist at Oxford Economics.

The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 25,000 to a seasonally adjusted 1.841 million during the week ended March 21, the claims report showed.

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The so-called continuing claims have declined from last year’s lofty levels. But people exhausting their eligibility for benefits, limited to 26 weeks in most states, could be holding the number down.

BLS data this week showed a larger-than-expected drop in job openings in February and hiring falling to the lowest level in nearly six years. REUTERS