WASHINGTON (AP) — The number of Americans filing for jobless aid hit their highest level in four months last week, but layoffs remain historically low despite ongoing economic uncertainty brought on by the war in Iran.
U.S. applications for unemployment benefits for the week ending May 30 increased by 13,000 to 225,000, the Labor Department reported Thursday. That’s the most since early February, before the U.S. and Israel launched attacks on Iran,
but still a historically low level. Analysts surveyed by FactSet expected 211,000 new applications.
Weekly filings for unemployment benefits are considered a proxy for U.S. layoffs and are close to a real-time indicator of the health of the job market.
Despite historically low layoffs, the labor market seems to be mired in what economists call a “low-hire, low-fire” state. That’s kept the unemployment rate low at 4.3%, but left many of those out of work struggling to find new employment.
Though U.S. employers delivered a surprising 115,000 new jobs in April, the Iran war has injected a large degree of uncertainty about the broader U.S. economy and labor market.
The Strait of Hormuz, through which travels one-fifth of the world’s oil, remains closed. Since the beginning of the war in late February, oil prices have spiked about 50% and the average price for a gallon of gas in the U.S. is now $4.24, up from less than $3 in late February. Besides hitting consumers’ pocketbooks, those higher costs can make businesses reluctant to hire.
Data from the U.S. government showed that inflation at the consumer level rose 3.8% from April 2025, the biggest jump in three years. Food prices are also up, but may not yet fully reflect rising energy costs due to the Iran war, analysts say.
Another recent report showed that wholesale prices shot up 6% from a year ago, the highest point in more than three years.
This comes at a time when U.S. inflation is already above the Federal Reserve’s 2% target. The Fed opted to leave its benchmark rate alone at its last meeting, citing economic uncertainty caused by instability in the Middle East and still-elevated inflation. Most analysts don’t expect the Fed to cut rates any time soon.
Lower interest rates can boost the economy and hiring, but also tend to stoke inflation, leading a number of Fed policymakers to say they are actually willing to consider an interest rate hike this year.
On top of that, the recent artificial intelligence boom and the investment required to develop it could alter or even replace some jobs.
Among the companies that have cut jobs recently are Verizon, UPS, Amazon, Disney, Starbucks and Walmart.
Weekly jobless aid applications have stabilized in a range mostly between 200,000 and 250,000 since the U.S. economy emerged from the pandemic recession. However, hiring began slowing about two years ago and tapered further in 2025 due to President Donald Trump’s erratic tariff rollouts, his purge of the federal workforce and the lingering effects of high interest rates meant to control inflation.
Employers added fewer than 200,000 jobs last year, compared with about 1.5 million in 2024, according to the data firm FactSet.
The government issues its May jobs report on Friday.
The Labor Department’s report Thursday showed that the four-week moving average of jobless claims, which softens some of the weekly volatility, rose by 6,500 to 214,750.
The total number of Americans filing for unemployment benefits for the previous week ending May 23 fell by 8,000 to 1.78 million, in line with analyst forecasts.
