New unemployment filings climbed to 225,000 last week, the highest level since before the U.S.-Israel war with Iran began, though layoffs remain historically low.
By yourNEWS Media Newsroom
New applications for unemployment benefits rose to their highest level in four months last week, signaling fresh strain in the labor market as the war in Iran continues to drive economic uncertainty, higher energy prices and inflation concerns.
The Labor Department reported Thursday that jobless claims increased by 13,000 to 225,000 for the week ending May 30. That was the highest weekly total since early February, before the United States and Israel launched attacks on Iran. Analysts surveyed by FactSet had expected 211,000 new filings.
Weekly unemployment applications are closely watched as a near real-time measure of layoffs. Although the latest increase suggests some softening, the overall level of claims remains historically low.
The labor market has increasingly settled into what economists describe as a “low-hire, low-fire” pattern. Employers are not cutting workers in large numbers, but they are also not adding jobs aggressively. That has kept the unemployment rate at 4.3%, while making it harder for job seekers to find new work.
U.S. employers added a stronger-than-expected 115,000 jobs in April, but broader uncertainty has grown since the start of the Iran war in late February. The conflict has disrupted global energy markets, with the Strait of Hormuz still closed. Roughly one-fifth of the world’s oil passes through the waterway.
Since the war began, oil prices have climbed about 50%. The average price for a gallon of gasoline in the United States is now $4.24, up from less than $3 in late February. Higher fuel costs have strained consumers and raised expenses for businesses, which can make employers more cautious about hiring.
Inflation has also accelerated. Government data showed consumer prices rose 3.8% from April 2025, the largest increase in three years. Food prices have also climbed, though analysts say the full impact of higher energy costs tied to the Iran war may not yet be reflected.
Wholesale inflation has risen even more sharply. A recent report showed wholesale prices increased 6% from a year earlier, the highest level in more than three years.
The inflation pressure comes while price growth remains above the Federal Reserve’s 2% target. The Fed left its benchmark interest rate unchanged at its most recent meeting, citing uncertainty caused by Middle East instability and still-elevated inflation.
Most analysts do not expect the Fed to cut rates soon. While lower interest rates can support economic growth and hiring, they can also worsen inflation. Some Fed policymakers have said they may consider raising interest rates this year if price pressures persist.
The labor market is also facing pressure from the rapid growth of artificial intelligence, which requires heavy investment and could change or replace some jobs. Recent job cuts have been announced by major companies including Verizon, UPS, Amazon, Disney, Starbucks and Walmart.
Jobless claims have mostly remained between 200,000 and 250,000 since the economy recovered from the pandemic recession. Hiring, however, began slowing about two years ago and has weakened further amid tariff uncertainty, federal workforce reductions and the lingering effects of high interest rates.
Employers added fewer than 200,000 jobs last year and about 1.5 million in 2024, according to FactSet data.
The four-week moving average of jobless claims, which smooths weekly volatility, rose by 6,500 to 214,750, the Labor Department said.
Continuing claims, which measure the number of Americans already receiving unemployment benefits, fell by 8,000 to 1.78 million for the week ending May 23. That figure was in line with analyst forecasts.
The government is scheduled to release its May jobs report Friday, offering a broader look at hiring, unemployment and wage trends as the economy absorbs the effects of war-driven energy costs and persistent inflation.
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