Calm before the inflation storm? US initial jobless claims increase slightly to 219,000, while continued claims unexpectedly drop to a near two-year low.

The number of initial jobless claims in the United States increased slightly last week, but there was no sign of deterioration, further indicating that the labor market is currently relatively stable. Data released by the U.S. Department of Labor on Thursday showed that for the week ending April 4, the seasonally adjusted number of initial jobless claims increased by 16,000 to 219,000, slightly higher than economists' expectations of 210,000. For the week ending March 28, the seasonally adjusted number of continued jobless claims (those who continue to receive benefits after the first week, which can serve as an alternative gauge of hiring activity) decreased by 38,000 to 1.794 million, the lowest level since May 2024, and lower than economists' expectations of 1.84 million. The data released on Thursday indicated that the labor market continues to be in a state of "low hiring, low layoffs," attributed by economists to the uncertainty brought about by Trump's import tariffs and large-scale immigration policies. The government's March employment report showed a gain of 178,000 nonfarm payrolls, with rebounds in recruitment across multiple industries and a slight decrease in the unemployment rate. Economist Eliza Winger stated, "Initial jobless claims in late March and early April increased more than expected, but this period typically sees larger fluctuations due to holidays like Easter and Good Friday. Looking at the overall smoothed data for March, the average number of claims in 37 states, including California, has decreaseddespite layoffs in the tech industryindicating that layoffs are still relatively limited geographically." However, the March nonfarm data also showed that the median duration of unemployment reached 11.4 weeks, the highest level in nearly four and a half years. Although the so-called continued jobless claims have fallen from last year's peak, this is likely because many have exhausted their benefit eligibilitymost states have a maximum duration of 26 weeks for unemployment benefits. Young unemployed individuals with limited or no work experience may not be eligible for benefits and are among the most severely affected groups in the soft labor market. Additionally, economists pointed out that uncertainty related to the Iran conflict and rising energy costs could dampen business confidence, leading to potential cutbacks in hiring plans in the coming months. So far, there is no evidence that employers are laying off workers due to the oil price shock caused by the U.S.-Iran conflict. President Trump announced on Tuesday a two-week ceasefire agreement with Tehran to reopen the blocked Strait of Hormuz. Surging global oil prices caused the national average gasoline retail price to exceed $4 per gallon in March for the first time in over three years, while stocks lost about $3.2 trillion in market value. Economists expect a jump in the March inflation rate, with the Consumer Price Index (CPI) likely to rise by up to 1.0% on a month-over-month basis, translating to an annual increase of approximately 3.3%. The Federal Reserve's inflation target is 2%. The minutes from the Federal Reserve's March meeting released on Wednesday showed that more policymakers believed last month that rate hikes might be necessary to address persistent inflation above the 2% target, especially considering the impact of the Iran conflict on inflation. Currently, the Fed maintains its benchmark overnight rate in the range of 3.50%-3.75%. The likelihood of a rate cut this year has significantly decreased. The minutes showed that most policymakers "expect the unemployment rate to remain basically stable, net job gains and labor force growth to continue at a low level, but some participants also anticipate softening in labor market conditions."