U.S. Jobless Claims Increase, But Layoffs Stay Low

Last week, U.S. applications for unemployment benefits increased, but layoffs continued at relatively healthy levels. According to the Labor Department, 209,000 people applied for jobless claims last week. This is a rise from the revised figure of 200,000 the previous week and above the forecasted 205,000. The four-week average of applications, which helps mitigate weekly fluctuations, remained steady at 199,000.

The number of individuals receiving employment benefits for the week ending August 1 decreased by 22,000, totaling 1.78 million. Typically, jobless benefit claims reflect layoffs. They have been within a historically low range of 200,000 to 230,000 weekly over the past year, indicating that employees with jobs are experiencing a significant level of job security.

The current unemployment rate in the U.S. stands at a low 4.1%. This suggests that the economy is weathering the recent rise in energy prices caused by the conflict with Iran. Carl Weinberg, chief economist at High Frequency Economics, noted, “The labor market has yet to show any sign of wear and tear from the surge in oil prices since the start of the war with Iran and the global energy supply shock.”

The situation presents challenges for individuals attempting to enter the job market or those who have recently lost jobs and are job hunting. Companies, affected by worker shortages in the aftermath of the COVID-19 lockdowns four to five years ago, are hesitant to lay off staff. However, they are also cautious about hiring new employees. Economists have termed this the “no hire, no fire” market.

Last month, instead of adding jobs, companies, government bodies, and nonprofits collectively reduced employment by 23,000 positions. Throughout this year, employers have added an average of 61,000 jobs monthly. This is an improvement compared to last year’s average of 9,700 jobs per month, which was the weakest hiring phase outside a recession since 2002. The ongoing effects of high interest rates and the unpredictable trade policies during President Donald Trump’s administration discouraged companies from hiring in 2025.

Despite the increase in hiring this year, it falls short of the 166,000 monthly jobs created on average in 2023 and 2024 and is significantly below the 491,000 monthly jobs recorded during the hiring boom of 2021-2022 following the pandemic lockdowns.