Jobless claims dip in US
New claims for unemployment benefits in the US declined last week, suggesting that layoffs have remained rare even as the broader labour market continues to cool. For the week ending April 11, 207,000 people filed initial jobless claims, down from 218,000 in the previous week. Economists expected a slightly higher figure of around 215,000.
The persistence of low claims highlights how stable the labour market has been, with slower hiring compared with the rapid pace of the past few years. The number of available workers has also grown more slowly, helping to balance out layoffs, even as employers grow more cautious about expanding their workforce amid uncertainty tied to the conflict with Iran.
Rising oil prices and renewed inflation pressures stemming from the conflict have pushed consumer sentiment to record lows. Economists warn that households may cut back on spending, which could eventually ripple through to hiring.
Energy costs push eurozone inflation higher
Meanwhile, energy costs pushed eurozone inflation higher than expected. Eurozone inflation came in slightly higher than initially estimated for March, as the energy shock linked to the Iran conflict proved stronger than expected.
Consumer prices were up 2.6% from a year earlier, the fastest pace since July 2024 and up from 1.9% in February, while the earlier estimate of 2.5% was revised upward.
Energy inflation was also adjusted higher to 5.1%, a sharp turnaround from February’s from 3.1 decline. Core inflation held steady at 2.3%.
Rising energy costs have pushed inflation above the European Central Bank’s (ECB) 2% target, prompting debate whether tighter policy is needed to prevent broader second round effects such as wage pressures.
The International Monetary Fund (IMF) has suggested the ECB may need to raise rates this year to maintain a neutral stance, before potentially reversing course in 2027.
UK registers stronger monthly growth
Finally, the UK registered stronger monthly growth, but rising oil and gas prices pose new headwinds.
The UK economy expanded for a second month in February, with gross domestic product (GDP) growth rising 0.5% month-on-month, stronger than January’s 0.1% and well above economists’ expectations.
But the recovery is already under threat as the Middle East conflict drives energy prices sharply higher. Services and production both registered a 0.5% increase, while construction registered a 1% increase in February.
Recent surveys suggest momentum has weakened since the outbreak of the war, with private-sector activity in March growing at its slowest pace in six months and manufacturing slipping back into a decline.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).
