WASHINGTON, April 23 (Reuters) - The number of Americans filing claims for unemployment benefits edged up last week, pointing to continued labor market stability in April, though economic uncertainty and higher prices stemming from the U.S.-Israeli war with Iran pose downside risks.
The absence of widespread layoffs suggested by the Labor Department's report on Thursday supports financial market expectations that the Federal Reserve will probably not cut interest rates this year as the nearly two-month conflict fans inflation and strains the global economy.
"The labor market has become more vulnerable since the start of the war, but the claims data over the last two months show no evidence of cracks," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "However, it's always been our expectation that the spike in oil prices would take some time to become apparent in the labor market data."
Initial claims for state unemployment benefits rose 6,000 to a seasonally adjusted 214,000 for the week ended April 18. Economists polled by Reuters had forecast 210,000 claims for the latest week. Claims remain tucked in their 201,000-230,000 range for this year. The four-week moving average of claims, which irons out week-to-week volatility, rose by only 750 to 210,750.
The war has disrupted shipping in the Strait of Hormuz, boosting the price of oil and other commodities, including fertilizers, petrochemicals and aluminum.
Tehran effectively closed the strait after the start of the war on February 28. Economists worry a prolonged conflict could undermine an already fragile labor market.
President Donald Trump's sweeping import tariffs and immigration crackdown were blamed for the labor market's stumbles last year. Trump on Tuesday indefinitely extended the ceasefire with Iran, though a U.S. Navy blockade of Iranian ports remained in effect.
Financial markets expect the U.S. central bank to keep its benchmark overnight interest rate in the 3.50%-3.75% range through the end of this year, though some economists still believe a reduction in borrowing costs is possible, especially if the labor market deteriorates as they anticipate.
Monthly consumer prices increased by the most in nearly four years in March. Higher fuel costs are already hurting margins for some businesses, with American Airlines (AAL.O), on Thursday cutting its 2026 profit forecast.
U.S. stocks opened lower. The dollar rose against a basket of currencies.
LOW-HIRE, LOW-FIRE LABOR MARKET
The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of April's employment report.
The four-week average of claims was unchanged between the March and April survey periods. Payrolls increased by 178,000 jobs in March after declining by 133,000 in February. Payrolls have dropped in six of the last 15 months.
The labor market has remained anchored by low layoffs, even as employers show little appetite for expanding headcount. Data next week on the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, will shed more light on the state of the labor market this month.
The so-called continuing claims increased 12,000 to a seasonally adjusted 1.821 million during the week ended April 11, the claims report showed.
While continuing claims have retreated from last year's highs, the decline could partly be due to workers exhausting benefits, which are capped at 26 weeks in most states. The data also excludes some unemployed young people with little or no work history, a group that is facing difficulties finding work.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
