US news: Jobless claims rise, layoffs remain low, economy contracts 0.2%

The US Labor Department said on Thursday applications for jobless benefits rose last week but workers broadly remain secure in their jobs despite economic uncertainty. 

Official data showed jobless benefits applications surged by 14,000 to 240,000 in the week ended May 24.

For the week of May 17, the total number of Americans receiving unemployment benefits rose by 26,000 to 1.92 million.

In April, the US employers added a strong 177,000 jobs and the unemployment rate stood at a healthy 4.2%.

Separately, the government said on Thursday that the US economy contracted 0.2% in the first quarter of 2025, a slight upgrade from its first estimate.

The economic growth was slowed by a rise in imports as companies in the US tried to bring in foreign goods before Trump’s massive tariffs went into effect.

The latest data reflect that the labor market remains strong, with plentiful jobs and relatively few layoffs.

Concerns over economic uncertainty triggered by President Donald Trump’s sweeping tariffs on imports upended a robust US labor market.

However, a sense of relief swept over financial markets on Thursday after a US federal court blocked Trump’s most tariffs imposed under an emergency-powers law. 

The Trump administration has filed appeal and the Supreme Court will certainly be called upon to decide the issue.

The court order announced on Wednesday threw into doubt Trump’s signature economic policy that has rattled global financial markets, frustrated trade partners and raised fears about inflation intensifying and the economy slumping.

Earlier in May, the US Federal Reserve held its lending rate at 4.3% for the third straight time after cutting it three times at the end of 2024.

Jerome Powell, Federal Reserve Chair, had said the potential for both higher unemployment and inflation are elevated, an unusual combination that complicates the central bank’s dual mandate of controlling prices and keeping unemployment low.