WASHINGTON (Reuters) – The labor market showed resilience in March, with a slight uptick in new applications for unemployment benefits signaling stability. Amid escalating trade tensions and significant cuts in government spending, initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 223,000 for the week ending March 15, according to the latest report from the Labor Department released on Thursday. Economists surveyed by Reuters had anticipated 224,000 claims for the week.
Despite fluctuations within the range of 203,000-242,000 this year, the number of layoffs has remained low, while hiring has cooled off. The impact of the government’s mass layoffs of public workers by President Donald Trump’s administration has been limited, with the unemployment compensation for federal employees (UCFE) program showing little effect.
Analysts noted challenges faced by workers laid off under Elon Musk’s Department of Government Efficiency (DOGE), making it more difficult for them to access unemployment benefits. Recent court rulings have deemed many of these terminations illegal, resulting in reinstatements but with workers placed on administrative leave temporarily.
The uncertainty generated by Trump’s tariff policies has dampened business sentiment, with economists highlighting the difficulties faced by companies in planning ahead. Data from Bank of America’s credit and debit card transactions revealed a slowdown in small business spending, potentially impacting new business formation and the small business labor market, a vital source of employment growth.
The Federal Reserve, in response to economic uncertainty, maintained its benchmark interest rate at 4.25%-4.50%. However, policymakers indicated a potential half-percentage point reduction in borrowing costs by the end of the year. Fed Chair Jerome Powell observed that labor market conditions appeared generally stable.
The claims data coincided with the period when businesses were surveyed for the nonfarm payrolls section of the March employment report. In February, the economy added 151,000 jobs. Next week’s data on the number of individuals receiving benefits after the initial week of aid, indicative of hiring trends, may provide further insights into the labor market’s health in March.
Continued claims for unemployment benefits rose by 33,000 to a seasonally adjusted 1.892 million for the week ending March 8, according to the report. The Fed revised its forecast for the unemployment rate to 4.4% for the year, up from the 4.3% projection in December.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
