Applications for unemployment benefits in the United States rose to their highest level in four months last week, reflecting growing economic uncertainty linked to the ongoing conflict in Iran. The Labor Department reported Thursday that jobless claims for the week ending May 30 increased by 13,000 to 225,000, surpassing analysts' expectations of 211,000.
Despite the rise, layoffs remain historically low. However, economists describe the current labour market as a 'low-hire, low-fire' environment, where the unemployment rate stays low at 4.3% but many job seekers struggle to find new positions. The war in Iran has injected significant uncertainty, with the Strait of Hormuz closed and oil prices surging by about 50% since late February, pushing US petrol prices to $4.24 per gallon.
Inflationary pressures are mounting, with consumer prices rising 3.8% year-on-year in April, the largest jump in three years. Wholesale prices also soared 6% from a year ago. The Federal Reserve has held its benchmark interest rate steady, citing Middle East instability and persistent inflation, and some policymakers have signalled openness to a rate hike this year.
Major companies including Verizon, UPS, Amazon, Disney, Starbucks, and Walmart have announced job cuts. The four-week moving average of claims rose by 6,500 to 214,750, while continuing claims fell by 8,000 to 1.78 million. The government is set to release its May jobs report on Friday.
