Fewer Americans filed for unemployment benefits last week as layoffs remain subdued, the Labor Department reported Thursday. Initial jobless claims for the week ending Jan. 10 fell by 9,000 to 198,000 — well below the 215,000 that analysts polled by FactSet had forecast and down from 207,000 the prior week.
The reading adds to a mixed portrait of a labor market in which employers are holding on to workers but remain reluctant to add staff — a pattern economists call “low hire, low fire” — while uncertainty from tariff policy and the lingering effects of elevated interest rates continues to constrain hiring.
Claims fall, but broader signals remain soft
The four-week average of jobless claims, which smooths week-to-week volatility, fell by 6,500 to 205,000, the Labor Department said. Total continuing claims for the week ending Jan. 3 declined by 19,000 to 1.88 million.
Applications for unemployment benefits are viewed as a near-real-time proxy for layoffs. The latest reading indicates that employers are retaining workers even as they have pulled back sharply on new hiring.
Last week, the government reported that employers added just 50,000 jobs in December — nearly unchanged from a downwardly revised figure of 56,000 in November — capping a year of weak employment gains. The unemployment rate slipped to 4.4% in December, its first decline since June, from 4.5% in November.
Openings drop, Fed cuts rates again
Also last week, the Labor Department reported that businesses posted 7.1 million open jobs at the end of November, down from 7.4 million in October, continuing a months-long retreat in labor demand as companies appear reluctant to expand headcount while retaining existing staff.
In an attempt to stabilize the softening labor market, the Federal Reserve last month trimmed its benchmark lending rate by a quarter-point — its third consecutive cut.
Federal Reserve Chair Jerome Powell said members of the rate-setting committee are increasingly concerned that the job market is even weaker than official figures indicate. Powell said recent employment data could be revised lower by as much as 60,000 jobs, which would mean employers have shed an average of roughly 25,000 positions per month since spring, when the Trump administration rolled out its sweeping import tariffs.
Corporate layoff announcements
Companies that have recently announced job cuts include UPS, General Motors, Amazon, and Verizon, the Associated Press reported.
Hiring has lost momentum across broad sectors of the economy, hobbled by uncertainty raised by President Donald Trump’s tariffs and the lingering effects of the high interest rates the Federal Reserve put in place in 2022 and 2023 to combat a surge of pandemic-induced inflation.