US weekly jobless claims increase moderately amid low layoffs

By Lucia Mutikani

WASHINGTON (Reuters) -The number of Americans filing new applications for unemployment benefits rose marginally last week, suggesting the labor market remained resilient despite darkening clouds over the economy caused by tariffs on imported goods.

But growing economic uncertainty caused by President Donald Trump’s constantly shifting tariffs policy is eroding business and consumer confidence, which could undercut spending and lead to job losses.

Signs of caution among businesses, evident in surveys and corporations cutting financial guidance, were reinforced by other government data on Thursday showing business spending on equipment barely rose in March.

“The downside risks to the labor market have increased,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 222,000 for the week ended April 19, in line with economists’ expectations.

The Labor Department data included the Good Friday holiday, which was later this year compared to 2024. Claims tend to be volatile around moving holidays and could also have been influenced by spring breaks which occur at different times across the states.

Since his tariffs announcement early this month, Trump has delayed reciprocal duties on more than 50 trade partners by 90 days, while raising tariffs on Chinese imports to 145%. Beijing retaliated with duties of its own.

Trump maintained a 10% universal tariff on nearly all trading partners as well as 25% duties on automobiles, steel and aluminum. The tariffs, which Trump sees as a tool to raise revenue to offset his promised tax cuts and to revive the U.S. industrial base, have stoked fears of high inflation and stagnation in economic growth.

The Federal Reserve’s Beige Book report on Wednesday showed “several districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions.”

It added there were “scattered reports of firms preparing for layoffs” and “notable” decreases in government employment “or at organizations receiving government funding.”

The Trump administration is in the midst of an unprecedented campaign to shrink the federal government through mass firings and deep spending cuts. The often chaotic layoffs, driven by billionaire tech Elon Mask’s Department of Government Efficiency, have so far not impacted the broader labor market.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 37,000 to a seasonally adjusted 1.841 million during the week ending April 12, the claims report showed.

The so-called continuing claims data covered the period during which the government surveyed households for April’s unemployment rate. Continuing claims were little changed between the March and April survey periods. The unemployment rate is currently at 4.2%, having risen from 4.0% in January.

The dollar was trading lower against a basket of currencies. U.S. Treasury yields rose.

TEPID BUSINESS SPENDING

A separate report from the Commerce Department’s Census Bureau showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans known as core capital goods, edged up 0.1% in March after a revised 0.3% drop in February.

There was a sharp decrease in orders for computers and electronic products. Orders for electrical equipment appliances and component also fell.

While orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 9.2% last month after gaining 0.9% in February, that is likely to be temporary because of the trade war with China.

Transportation equipment orders soared 27.0%, boosted by a 139.0% jump in commercial aircraft orders, which are extremely volatile. Boeing reported on its website it had received 192 aircraft orders, up from 13 in February.

But China this month ordered its airlines not to take further deliveries of Boeing jets, and some airline CEOs have said they would defer plane deliveries rather than pay duties, which could undermine Boeing’s recovery from a crippling strike last year.

Two Boeing planes destined for China recently returned. Boeing CEO Kelly Ortberg, however, said on Wednesday the company had avoided broader damage from tariffs and could redirect jets to airlines that have been “asking for additional airplanes.”

“This may be a last hurrah for Boeing for a time, as I suspect airlines, like other businesses, are likely to turn more cautious for a time,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets.

Shipments of core capital goods rose 0.3% after rebounding 0.7% the prior month. These shipments go into the into the calculation of the business spending on equipment component in the gross domestic product report. Business investment in equipment contracted in the fourth quarter.

Growth estimates for the January-March quarter are mostly below a 0.5% annualized rate and the odds of a contraction are high. The economy grew at a 2.4% pace in the fourth quarter.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)