U.S. initial jobless claims rebounded to 200,000 last week, while continuing unemployment claims hit a new low since January 2024.

Despite frequent reports of high-profile layoffs recently, the U.S. labor market continues to show significant resilience. Layoff activity remains low, and the overall employment market is stable. Data released by the U.S. Department of Labor on Thursday showed that for the week ending May 2, initial jobless claims rose by 10,000 to 200,000, lower than Bloomberg economists’ expectations of 205,000. The previous week, the figure had fallen to the lowest level since 1969. At the same time, continuing jobless claims dropped to 1.766 million, hitting a new low since January 2024, also better than the market expectation of 1.8 million. These figures further reinforce the market's assessment of the U.S. labor market's resilience. Despite the fact that well-known companies like Meta and Nike have announced layoff plans this year, initial jobless claims have remained below 230,000. The market is now focusing on the April nonfarm payrolls report set to be released on Friday, which is expected to show job growth for the second consecutive month. “Low hiring, low firing” continues This week’s data continues the “low hiring, low firing” trend that has characterized the U.S. labor market in recent years. According to Reuters, economists believe that tech sector employees who are laid off mostly receive generous severance packages, which helps to explain why large-scale layoff announcements have not led to an increase in jobless claims. Government data released on Tuesday showed that the number of job openings per unemployed person increased from 0.91 in February to 0.95 in March, consistent with the assessment of overall labor market stability. Furthermore, the Conference Board survey found the proportion of consumers who think finding a job is “difficult” declined in April, while the proportion who believe jobs are “plentiful” remained basically the same. AI becomes main cause of layoffs, tech leads Although the overall employment market remains robust, layoff pressure in the technology sector is still significant. A report released Thursday by global outplacement firm Challenger, Gray & Christmas showed that U.S. employers announced a total of 83,387 layoff plans in April, up 38% from March but down 21% from the same period last year. Notably, artificial intelligence was the top cause of layoffs for the second consecutive month. In April, layoff announcements due to AI reached 21,490, accounting for 26% of layoffs that month. So far this year, AI has been cited for 49,135 layoff plans, about 16% of the annual total, up from 13% at the end of March. “Tech companies continue to announce large-scale layoffs and dominate layoff announcements across industries,” said Andy Challenger, Chief Revenue Officer at Challenger, Gray & Christmas. “Whether or not the positions are directly replaced by AI, the budget for these jobs has already been reallocated.” Focus on nonfarm payrolls: slower growth expected, risks remain The market’s current focus is on the April nonfarm payrolls report to be released this Friday. According to a Reuters survey of economists, nonfarm payrolls in April are expected to increase by 62,000, significantly less than the 178,000 in March. This slowdown mainly reflects two factors: first, the temporary boost from the mild winter weather is fading, and second, disruptions due to healthcare worker strikes that had affected the baseline are unwinding. It's worth noting that the expected increase is still above the “break-even” level estimated by economists needed to maintain labor force growth—a level currently between 0 and 50,000. The April unemployment rate is expected to stay at 4.3%, but the Chicago Fed’s forecast is 4.23%, which may round down to 4.2%. Additionally, the report cites economists’ warnings that conflict in the Middle East could lead to a spike in oil prices and disruptions in shipping through the Strait of Hormuz, pushing up the prices of commodities like fertilizer, petrochemicals, and aluminum and posing downside risks to the labor market. However, so far there’s no sign these geopolitical factors have had a substantive impact on April’s jobs data. Risk Warning and Disclaimer The market is risky and investments must be made cautiously. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investments are made at one’s own risk.