The number of Americans filing new claims for unemployment benefits unexpectedly declined last week, hinting at stable labor market conditions and a rebound in employment growth in March.
Initial claims for unemployment benefits dropped by 8,000 to 205,000 in seasonally adjusted data during the week ending March 14, the Labor Department said on Thursday. Economists polled by Reuters had forecasted 215,000 claims for the previous week.
The government introduced new seasonal factors for 2026 and revised the seasonal factors from 2021 to 2025. Seasonal factors are used to remove seasonal fluctuations from the data series. Employment claims data have been revised for the years 2021 to 2025.
Layoffs have remained relatively low, even as businesses have been cautious about increasing their workforce due to the uncertainty caused by President Donald Trump’s aggressive tariff policies. Trump has imposed global tariffs of 10%, with plans to raise them to 15%. Investigations have been launched against some trading partners, which economists predict will result in higher tariffs.
Businesses are also facing increased uncertainty due to the conflict between the US and Iran, which has driven oil prices up over 40% since the conflict began in late February.
The Federal Reserve on Wednesday kept its benchmark interest rate unchanged at 3.50% to 3.75%. Policymakers expect rising inflation, a stable unemployment rate, and only one interest rate cut this year.
Data on compensation claims covered the period during which the government surveyed businesses for the “non-farm payrolls” component of the March employment report.
Payrolls shrank by 92,000 jobs in February, marking the sixth decline since January 2025 and the second largest. Harsh winter weather, a strike by healthcare workers, and the reversal of excessive wage gains recorded in January partly explain this drop. The weather-related slowdown likely eased in March and healthcare workers returned to work, which should support employment growth this month.
However, employment growth is almost stagnant, with Fed Chair Jerome Powell telling reporters on Wednesday that there is “a sort of zero employment growth balance,” and that “there is a downside risk, and it’s not a very comfortable balance.”
The number of people receiving unemployment benefits after their first week of assistance, an indicator of hiring, rose by 10,000 to 1.857 million in seasonally adjusted data during the week ending March 7, according to the claims report.
Many unemployed individuals, including recent college graduates, are experiencing prolonged periods of unemployment. The unemployment rate increased from 4.3% in January to 4.4% in February.
