US Initial Jobless Claims Sink as Labor Market Holds Steady

The U.S. labor market remains resilient amid broader economic volatility.

Companies look to hire new employees at a job fair in Southern Florida. Joe Raedle/Getty Images

U.S. initial jobless claims tumbled last week, signaling that companies are not laying off workers amid economic uncertainty.

Department of Labor data released on April 17  show that for the week ended April 12, the number of individuals filing new applications for unemployment benefits declined by 9,000, to a nine-week low of 215,000.

This came in below the consensus forecast of 225,000.

Jobless claims filed under programs for federal workers edged up by just 34, to 548.

Economists monitor weekly jobless claims because they are an important indicator of the health of the U.S. labor market, particularly during volatile economic conditions.

Continuing jobless claims—the number of people currently receiving unemployment benefits—increased to a higher-than-expected 1.885 million from 1.844 million.

The four-week average, which strips week-to-week volatility, dropped by nearly 3,000, to 220,750.

Scanning the Economy

Market watchers have worried that the Trump administration’s changes to fiscal, immigration, and trade policies would upend the national labor market and the broader economic landscape. So far, a flurry of economic data indicates that the employment arena remains intact.

Last month, the U.S. economy created a larger-than-expected 228,000 new jobs, nearly double what was added in February. In addition, employment gains in the first three months of 2025 were close to the one-year average.

Federal Reserve Chair Jerome Powell said on April 16 that President Donald Trump’s tariffs could present a “challenging scenario” of increasing inflation and weakening employment. He noted that the president’s tariffs were more significant than anticipated, which could result in slowing growth and higher prices.

“Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent,” Powell said during an appearance at the Economic Club of Chicago.

Powell also stated that it is unlikely that public sector layoffs will have an enormous impact on the U.S. economy since government employment accounts for a smaller share of national payrolls.

According to global recruitment firm Challenger, Gray & Christmas, announced job cuts in March were primarily concentrated in the government sector.

“Job cut announcements were dominated last month by Department of Government Efficiency [DOGE] plans to eliminate positions in the federal government. It would have otherwise been a fairly quiet month for layoffs,” Andrew Challenger, the firm’s senior vice president, said in a statement.

Layoffs in the wider economy have been muted, with Bureau of Labor Statistics data suggesting employers are neither hiring nor terminating their workers. However, economic observers fear rising unemployment in the coming months, with business sentiment deteriorating.

While the years-long expansion in the labor market continues, economists are finding some cracks.

The Federal Reserve Bank of San Francisco published a paper finding two forming trends: a decline in the job-finding rate and longer unemployment durations. The former represents the rate of individuals transitioning from being out of work to being employed, while the latter measures the length of time people are unemployed.

“Recent transition rates and unemployment duration patterns are similar to historical patterns around the onset of several past recessions,” San Francisco Fed economists wrote.

“The increase in the unemployment rate since 2023 has mostly been associated with the decline in the job-finding rate, similar to pre-pandemic recessions. Consistent with this, we also find that the median duration of unemployment has increased notably.”

The Conference Board’s March Consumer Confidence Index spotlighted mixed labor market assessments. While the short-term outlook diminished, present labor market conditions improved.

“Consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” said Stephanie Guichard, a senior economist at The Conference Board.

At the same time, more households are predicting higher unemployment over the next 12 months.

According to the New York Fed’s latest Survey of Consumer Expectations, expectations that the U.S. unemployment rate will be higher one year from now surged to the highest level since April 2020. In addition, the perceived probability of losing a job in the next 12 months jumped to a one-year high.

Manufacturing

Other economic figures were released on April 17.

The Philadelphia Fed’s Manufacturing Business Outlook Survey—a monthly report measuring the health of the region’s manufacturing industry—contracted sharply in April. Activity diminished, new orders declined, shipments fell, and price pressures increased.

One of the survey’s key components held steady: employment conditions.

Fed data released on April 17 highlighted that industrial and manufacturing production slowed in March after a robust February performance.

Industrial output fell by 0.3 percent, from an upwardly revised 0.8 percent. Manufacturing production rose by 0.3 percent, from an upwardly adjusted 1 percent.