Layoffs still sparse, U.S. unemployment claims dropped to 206,000 last week

WASHINGTON (AP) — Fewer people filed for U.S. unemployment benefits last week, indicating that layoffs remain scarce and most Americans enjoy job security. Last week, jobless claims fell to 206,000 from 212,000 the previous week, after being revised downward. The four-week average of claims also slightly increased to 204,000 from 199,750, according to the Labor Department's report.

Economists closely monitor these unemployment claims as they serve as a proxy for layoffs, offering insight into the health of the job market. Over the past year, claims have remained in a historically low range of 200,000 to 230,000 weekly. Carl Weinberg, chief economist at High Frequency Economics, noted in a commentary that the labor market has not shown any signs of being adversely affected by the recent surge in oil prices due to the Iran war and the global energy supply shock.

While the U.S. unemployment rate currently stands at 4.1%, this is partly due to the economy's resilience despite higher energy prices. It is also attributed to President Donald Trump's immigration crackdown and the ongoing retirement of baby boomers, which has led to fewer people competing for jobs. Over the past year, more than 1.3 million individuals have withdrawn from the U.S. labor force.

Despite the overall strength of the labor market, it can be tough for those seeking their first job and those who have lost their jobs and are searching for new work. Companies, particularly in the wake of the COVID-19 lockdowns, have been cautious about laying off staff and are hesitant to take on new workers. This cautious approach is often referred to as the "no hire, no fire" job market.

In July, companies, government agencies, and nonprofits collectively cut 23,000 jobs. However, this year, employers have added 61,000 jobs per month, marking an improvement from the 9,700 jobs averaged last year – the weakest hiring period outside a recession since 2002. The lingering effects of high interest rates and Trump's unpredictable trade policies have discouraged companies from hiring in 2025.

Nonetheless, hiring this year remains significantly below the 166,000 monthly jobs created on average in 2023 and 2024, and far below the 491,000 monthly jobs recorded during the 2021-2022 hiring boom following pandemic lockdowns.