U.S. jobless claims increased last week amid geopolitical tensions and signs of slowing economic growth, the Labor Department reported Thursday. Applications for unemployment benefits rose by 16,000 to 219,000 for the week ending April 4, exceeding analysts’ expectations of around 210,000 but remaining within the range seen over recent years. The weekly claims data are closely watched as an indicator of layoffs and overall labor market health.

The labor market data emerged shortly after Iran, Israel, and the United States announced a tentative two-week ceasefire in their ongoing conflict, which initially sparked optimism in global markets. However, lingering uncertainties have tempered that optimism, as renewed hostilities led to Israel striking Lebanon and Iran closing the strategic Strait of Hormuz, a critical passage for nearly 20% of global oil shipments.

Energy prices remain volatile. U.S. crude oil, which reached $112 per barrel prior to the ceasefire announcement, fell sharply to around $95 after the deal but then rebounded close to $100 amid concerns about the ceasefire’s durability. Elevated oil prices continue to place upward pressure on energy costs for businesses and consumers, complicating efforts to curb inflation.

Inflation remains a key concern for U.S. policymakers. A report released Thursday, delayed due to the government shutdown earlier this year, showed inflation pressures remained elevated in February, before recent conflict-driven price spikes. The Federal Reserve has maintained a cautious stance, raising interest rates three times in 2025 but refraining from cuts so far in 2026, as inflation remains above the central bank’s 2% target. The government is expected to release March consumer price data on Friday.

The broader economy also showed signs of strain. The Commerce Department revised down its estimate of fourth-quarter 2025 GDP growth to a modest annualized rate of 0.5%, from 0.7% previously reported. The slow growth was attributed in large part to a 43-day federal government shutdown in the final quarter, which caused federal spending and investment to contract sharply, subtracting more than a full percentage point from GDP growth. Consumer spending, although still expanding, also slowed during the quarter.

For all of 2025, the economy grew 2.1%, a deceleration from 2.8% in 2024 and 2.9% in 2023. Business investment outside housing rose moderately, likely reflecting continued investment in technology sectors such as artificial intelligence, but at a slower pace than the previous quarter. An underlying measure of economic strength, which excludes volatile components like exports and government spending, also indicated a slowdown in the final quarter.

The U.S. labor market has experienced fluctuations early in 2026. After adding 160,000 jobs in January, payrolls contracted by 133,000 in February before rebounding with a firm gain of 178,000 in March. Yet, some major employers have announced sizable layoffs recently, including tech giant Oracle and media company Disney, alongside other firms like Morgan Stanley, Block, UPS, and Amazon.

The four-week moving average of jobless claims edged up to around 209,500 last week, and continuing claims for the week ending March 28 dropped to the lowest level in nearly two years at 1.79 million. Despite the relatively low unemployment rate of 4.3%, the labor market is characterized by a “low-hire, low-fire” dynamic, where the pace of new hiring has slowed and displaced workers face challenges securing new employment.

With ongoing geopolitical risks affecting energy prices and commerce, economic uncertainties persist. The first official GDP report for the first quarter of 2026 is due at the end of April, when more clarity may emerge on the trajectory of the U.S. economy.