The number of Americans applying for unemployment aid was unchanged at 229,000 for the week ending May 10, the Labour Department said Thursday. That’s in line with the 230,000 new applications analysts forecast.
Weekly applications for jobless benefits are seen as representative of US layoffs and have mostly bounced around a healthy range between 200,000 and 250,000 since COVID-19 ravaged the economy and wiped out millions of jobs five years ago.
Even though Trump has paused or rolled back many of his tariff threats, concerns remain about a global economic slowdown that could upend the US labour market, which has been a pillar of the American economy for years.
Last week, the Federal Reserve held its benchmark lending rate at 4.3 per cent for the third straight meeting after cutting it three straight times at the end of last year.
Fed chair Jerome Powell said the risks of both higher unemployment and inflation have risen, an unusual combination that complicates the central bank's dual mandate of controlling prices and keeping unemployment low.
Powell said that tariffs have dampened consumer and business sentiment but that data has not yet shown significant harm to the economy.
Also on Thursday, the government reported that inflation at the wholesale level fell unexpectedly in April for the first time in more than a year. However, new retail sales data showed that Americans pulled back their spending in April after stocking up on goods the month before to get ahead of expected price increases due to tariffs.
On Monday, the US and China agreed to a 90-day pause in their trade war, giving financial markets a boost and at least temporarily relieving some of the anxiety over the impact of tariffs on the US economy.
Trump is attempting to reshape the global economy by dramatically increasing import taxes to rejuvenate the US manufacturing sector.
Contraction has already begun in the US, where the economy shrank at a 0.3 per cent annual pace from January through March as Trump's trade wars disrupted business. First-quarter growth was slowed by a surge in imports as companies in the US tried to bring in foreign goods before Trump's massive tariffs went into effect.
Trump has also promised to drastically downsize the federal government workforce, which occupied much of the initial weeks of his second term.
It’s not clear when the job cuts ordered by the Department of Government Efficiency — or “DOGE,” spearheaded by billionaire Tesla CEO Elon Musk — will surface in the weekly layoffs data. Many of the cuts are being challenged in the courts, though the federal government staff reductions are already being felt, even outside of the Washington, D.C. area.
Despite showing some signs of weakening during the past year, the labour market remains robust, with plentiful jobs and relatively few layoffs.
Earlier this month, the government reported that US employers added a surprisingly strong 177,000 jobs in April and the unemployment rate held at a historically healthy 4.2 per cent.
On Tuesday, Microsoft began laying off about 6,000 workers, nearly 3 per cent of its workforce and its largest job cuts in more than two years as the company spends heavily on artificial intelligence. Other companies that have announced job cuts this year include Workday, Dow, CNN, Starbucks, Southwest Airlines and Facebook parent company Meta.
The total number of Americans receiving unemployment benefits for the week of May 3 rose by 9,000 to 1.88 million.
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