The number of Americans filing initial claims for unemployment benefits fell more than expected last week, signaling ongoing labor market resilience even as economic uncertainty mounts over President Donald Trump's steep new tariffs and the Federal Reserve's warning of rising risks.
The Labor Department reported Thursday that 228,000 people filed new claims for the week ending May 3, a drop of 13,000 from the prior week. That figure was below economists' forecast of 230,000, according to a Reuters survey. The decline reversed a temporary spike tied to school spring breaks in New York, which had lifted the previous week's claims to a two-month high.
The number of continuing claims, a proxy for the total number of unemployed individuals receiving benefits, declined by 29,000 to 1.879 million for the week ending April 26. That figure had stood at 1.91 million a week earlier.
The jobless claims data comes on the heels of April's employment report, which showed the U.S. economy added 177,000 jobs last month, while the unemployment rate held steady at 4.2%. However, the median duration of unemployment increased to 10.4 weeks from 9.8 weeks in March, suggesting that those who lose jobs may be struggling longer to find new employment.
The backdrop to these numbers is increasingly complex. On Wednesday, the Federal Reserve kept its benchmark interest rate unchanged at 4.25%-4.50%, but signaled concern over mounting risks from new tariffs and economic headwinds.
"The tariff increases announced so far have been significantly larger than anticipated," Fed Chair Jerome Powell said. "If sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment."
Trump's latest tariffs, including a 145% duty on Chinese imports, have roiled markets and shaken business sentiment. While meant to support American manufacturing and offset revenue lost to his tax cuts, the tariffs have injected volatility into corporate hiring plans and global trade flows.
An Institute for Supply Management report last week showed that manufacturing employment remained weak in April. "Layoffs were the primary tools used, an indication that head-count reduction is becoming more urgent," the ISM noted in its commentary.
