The U.S. labor market remained largely stable in late March, with new claims for unemployment benefits unexpectedly falling, even as the nation’s trade deficit widened in February amid soaring energy costs and global uncertainty.
The Labor Department reported Thursday that initial applications for state unemployment benefits fell 9,000 to a seasonally adjusted 202,000 for the week ended March 28, well below economists’ forecast of 212,000. Continuing claims, representing those receiving ongoing benefits, rose by 25,000 to 1.841 million.
Analysts said the data suggest the labor market remains in a “low-hire, low-fire” state, with hiring and layoffs largely balanced despite lingering economic uncertainty. Private nonfarm payroll growth averaged just 18,000 jobs per month over the three months through February, reflecting a cautious stance by employers.
“The labor market continues to show resilience, but global risks, including the month-long U.S.-Israeli war with Iran, could weigh on growth in the coming months,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. The conflict has driven oil prices up more than 50 percent, pushing the national average retail gasoline price past US$4 per gallon for the first time in over three years.
The war’s impact is expected to be gradual, potentially slowing consumer spending and increasing costs for businesses. In March, the stock market lost roughly US$3.2 trillion amid concerns about energy costs, trade volatility, and broader geopolitical risks.
Economic experts noted that domestic factors are also constraining labor growth. Stricter immigration policies, reduced labor supply, and the lingering effects of aggressive tariffs implemented in recent years have contributed to the modest pace of job creation.
Meanwhile, the U.S. trade deficit widened 4.9 percent to $57.3 billion in February, driven by stronger imports. Total imports rose 4.3 percent to US$372.1 billion, fueled by capital goods such as computers, semiconductors, and other equipment, as well as industrial supplies, consumer goods, and automotive parts.
Exports also increased, rising 4.2 percent to a record US$314.8 billion, with goods exports climbing 5.9 percent. Gains were led by nonmonetary gold, natural gas, and non-petroleum products. Despite this, the goods trade deficit expanded 3 percent to $84.6 billion, underscoring the ongoing drag of trade imbalances on economic growth.
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Service exports reached a record US$107.9 billion, bolstered by travel, financial services, and intellectual property charges, while service imports jumped to $80.6 billion. Analysts caution that disruptions in energy and shipping due to the conflict in the Middle East could further influence trade flows in March and beyond.
“The effect of the ongoing oil disruption will likely be evident in the March trade data,” said Michael Gapen, chief economist at Morgan Stanley.
Economic growth is already facing headwinds. The Atlanta Federal Reserve cut its first-quarter GDP growth estimate by 0.3 percentage points to an annualized rate of 1.6 percent. Trade imbalances subtracted from GDP in the fourth quarter, during which the economy expanded at a mere 0.7 percent.
Despite these pressures, economists expect the unemployment rate to have held steady at 4.4 percent in March. Nonfarm payrolls likely rebounded modestly following February’s decline of 92,000 jobs, which had been influenced by a healthcare workers’ strike and severe winter weather.
As the U.S. navigates a volatile combination of global conflict, rising energy prices, and persistent trade imbalances, policymakers and businesses face a delicate balance between maintaining employment stability and supporting economic growth in a rapidly shifting environment.
