US Jobless Claims Fall, But Economy Faces Uncertainty

Fewer Americans filed for jobless aid last week as lay-offs remain low despite a number of uncertainties that continue to cloud the economy.

US applications for unemployment benefits for the week ending May 16 fell by 3,000 to 209,000, the Labour Department reported Thursday. That is fewer than the 213,000 new applications analysts surveyed by the data firm FactSet had forecast.

Weekly filings for unemployment benefits are considered a proxy for US lay-offs and are close to a real-time indicator of the health of the job market.

Despite historically low lay-offs, the labour market appears to be stuck in what economists call a “low-hire, low-fire” state. That is kept the unemployment rate low at 4.3 per cent, but left many of those out of work struggling to find new employment.

Though US employers delivered a surprising 115,000 new jobs in April, the Iran war has injected a large degree of uncertainty about the broader US economy and labour market.

The Strait of Hormuz, where one-fifth of the world’s oil travels through, remains closed. Since the beginning of the war in late February, oil prices have spiked more than 50 per cent and the average price for a gallon of gas in the US has climbed to US$4.56 from less than US$3. Besides hitting consumers’ pocketbooks, those higher costs can discourage businesses from hiring.