U.S. initial jobless claims for last week moved higher than expected to 421,000, the U.S. Department of Labor reported Thursday.

“This is well ahead of the benchmark 400,000 level, a level thought to be indicative of a contracting labour market,” says RBC Financial Group. “Certainly, there seems to be little for unemployed workers to be encouraged about. U.S. firms have been reticent to boost hiring levels due to war fears and other geopolitical risks. Moreover, U.S. companies have also recently been constrained by rising energy prices which have added to their cost pressures.”

Despite all the gloom, RBC suggests that most of the weakness is largely war-related and the economy should be back into recovery mode once these worries diminish. “Still, if history is any guide, the labour market will likely be the last place to show signs of a full-blown recovery,” it cautions.