US applications for unemployment benefits inch down to 213,000 as layoffs remain stable

U.S. unemployment claims edged lower last week, decreasing by 1,000 to 213,000 for the week ending March 7, according to data released Thursday by the Labor Department. The figure came in slightly below economists’ expectations of 215,000 new applications, as surveyed by FactSet.

The modest decrease maintains the pattern of historically low layoffs that has characterized the U.S. labor market in recent years, with weekly unemployment filings typically ranging between 200,000 and 250,000. However, this relative stability in weekly claims masks broader concerns about the overall health of the job market.

Last week’s unexpected job losses reported by the Labor Department have raised new concerns about the economy’s trajectory. U.S. employers cut 92,000 jobs in February, surprising economists who had projected a gain of 60,000 positions. Adding to the worrying outlook, the government also revised down December and January payrolls by a combined 69,000 jobs, pushing the unemployment rate up to 4.4%.

Despite the low rate of weekly layoffs, several major companies have recently announced significant job cuts. Morgan Stanley, Block (formerly Square), UPS, and Amazon have all revealed plans to reduce their workforces, highlighting the growing caution among employers across various sectors.

The labor market now appears to be in what economists describe as a “low-hire, low-fire” state – a situation where companies remain hesitant to add new positions but are also largely avoiding mass layoffs. This dynamic has kept the unemployment rate relatively low historically but has created challenges for job seekers, who face increasingly limited opportunities.

“The data over the past year points to a clear slowdown in hiring,” said Michael Pearson, chief economist at Capital Economics. “Companies are maintaining their existing workforces but showing reluctance to expand amid economic uncertainty.”

Multiple factors have contributed to this cautious approach by employers. President Donald Trump’s tariff policies have created unpredictability in international markets, while the lingering effects of the Federal Reserve’s aggressive interest rate hikes in 2022 and 2023 – implemented to combat post-pandemic inflation – continue to weigh on business investment and expansion plans.

The economic outlook faces additional complications from geopolitical tensions. The ongoing war in Iran has driven oil prices up by approximately 25% in less than two weeks, raising concerns about potential inflationary pressures at a time when inflation remains above the Federal Reserve’s 2% target.

A report released Wednesday showed consumer prices for essentials like groceries and gasoline were 2.4% higher in February compared to a year earlier. While this matched the previous month’s rate and came in slightly below economists’ expectations of 2.5%, it doesn’t account for the recent spike in gasoline prices resulting from Middle East tensions.

The Federal Reserve is closely monitoring these developments as it prepares for its upcoming meeting on interest rates. The central bank’s preferred inflation gauge, the personal consumption expenditures (PCE) index, will be released Friday, providing additional context for policymakers as they deliberate on monetary policy adjustments.

Thursday’s unemployment report also revealed that the four-week moving average of jobless claims, which helps smooth out week-to-week volatility, decreased by 4,000 to 212,000. Meanwhile, the total number of Americans receiving unemployment benefits for the week ending February 28 fell by 21,000 to 1.85 million.

Economists remain divided on whether the current labor market represents a temporary adjustment or signals a more concerning economic slowdown. Many expect the Federal Reserve to begin cutting interest rates later this year to support economic growth, though the timing and magnitude of such cuts remain uncertain amid mixed economic signals.