US Initial Jobless Claims Increase to 215,000 Amid Ongoing Iran Tensions

US Unemployment Claims Rise Amid Economic Uncertainty Caused by Iran War

The US Labour Department reported that jobless claims increased to 215,000 last week, up from 210,000 the week before. This rise was reflected in the four-week moving average of claims, which surged by nearly 6,300 to 209,000.

The number of Americans seeking unemployment benefits has stabilized in a low range of mostly 200,000 to 250,000 a week since the US economy emerged from a brief but nasty pandemic recession in 2020. This suggests that most U.S. companies have not resorted to layoffs. However, employers have been cautious in their hiring, adding fewer than 10,000 jobs a month last year, the weakest hiring outside recession years since 2002.

Job creation has picked up slightly this year, averaging 76,000 a month from January through April. In contrast, the country added 122,000 jobs a month in 2024 and averaged nearly 400,000 a month from 2021 through 2023 as the economy recovered from COVID-19 lockdowns.

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The United States now requires fewer jobs to keep the unemployment rate from rising, with President Donald Trump's immigration crackdown and ongoing Baby Boomer retirements potentially reducing the monthly "break-even rate" of hiring to as low as zero. The unemployment rate, which stood at 4.3% in April, has remained low by historic standards.

However, the Iran war has clouded the economic outlook, with higher energy prices squeezing consumers and businesses. Iran responded to US and Israeli attacks by closing the Strait of Hormuz, through which a fifth of the world's oil passes, causing the biggest disruption of global oil supplies in history. As a result, US gasoline prices have surged to an average of $4.43 a gallon, up from $2.98 a gallon on the eve of the conflict, according to AAA.