The US labour market showed signs of resilience toward the end of March, with fresh data pointing to subdued layoffs as initial applications for unemployment benefits fell.
New claims for state unemployment benefits dropped by 9,000 to a seasonally adjusted 202,000 in the week ended March 28, according to data released by the Labor Department.
The figure came in below economists’ expectations of 212,000, suggesting that layoffs remain contained.
So far this year, claims have hovered in a narrow range of 201,000 to 230,000, reflecting what economists describe as a “low hire, low fire” environment.
While companies are not aggressively expanding their workforce, they are also largely holding on to existing employees.
Private-sector job growth has remained subdued, averaging just 18,000 new positions per month in the three months through February, underscoring a cautious hiring backdrop.
The advance seasonally adjusted insured unemployment rate was 1.25% for the week ending March 21, unchanged from the previous week’s unrevised rate.
Hiring outlook clouded by war and costs
Despite the steady pace of layoffs, the broader employment picture remains uncertain.
Economists expect job growth to rebound modestly in March, with forecasts pointing to an increase of around 60,000 positions following February’s decline of 92,000.
However, the sustainability of any recovery is in question.
The ongoing conflict involving Iran has pushed global oil prices sharply higher, with gasoline prices in the US climbing above $4 per gallon for the first time in more than three years.
Nancy Vanden Houten, lead US economist at Oxford Economics, warned that the war could delay improvements in the labour market.
“We do expect it to delay the modest improvement we expected in the labor market this year, as uncertainty, a slowdown in consumer spending and rising costs cause businesses to put hiring on hold,” she said in a Reuters report.
Meanwhile, continuing claims—a proxy for the number of people receiving benefits after their initial claim—rose by 25,000 to 1.84 million in the week ended March 21, indicating that it may be taking longer for unemployed workers to find new jobs.
US private payrolls increased by 62,000 in March.
AI-led restructuring adds pressure: Challenger, Gray & Christmas
Separate data highlighted a growing structural shift in the labour market, as companies increasingly turn to artificial intelligence to streamline operations.
A report by Challenger, Gray & Christmas showed that US employers announced 60,620 job cuts in March, with the technology sector accounting for the largest share of reductions at 18,720.
Companies such as Dell were among those driving layoffs.
Artificial intelligence was cited as a major factor behind the cuts, responsible for more than 15,000 planned job reductions—roughly a quarter of the total.
“Companies are shifting budgets toward AI investments at the expense of jobs,” said Andy Challenger, the firm’s chief revenue officer.
He added that while AI may not fully replace roles across industries, it is already displacing certain functions, particularly in technology.
Labour market remains balanced but fragile
Despite rising layoff announcements, overall job cuts in the first quarter totaled 217,362, marking the lowest first-quarter figure since 2022 and a decline from the previous quarter, the Challenger, Gray & Christmas report said.
The unemployment rate is expected to hold steady at 4.4% when official payroll data is released, pointing to a labour market that remains broadly stable.
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