The number of Americans filing new claims for unemployment benefits rose slightly last week but remained well below expectations, reinforcing signs that the US labour market continues to expand at a steady, if subdued, pace.
Initial claims for state unemployment benefits increased by 1,000 to a seasonally adjusted 200,000 in the week ended January 17, the Labor Department said on Thursday.
Economists polled by Reuters had forecast a rise to 210,000.
The modest increase comes amid ongoing volatility in the data, as seasonal adjustments around the year-end holidays and the start of the new year continue to distort weekly readings.
Despite the noise, economists say the broader picture remains one of stability.
Low-hiring, low-firing environment persists
Labour market conditions are increasingly being described as “low-hiring, low-firing,” with employers reluctant to add staff but also hesitant to shed workers.
Economists attribute this dynamic partly to uncertainty surrounding President Donald Trump’s aggressive trade and immigration policies, which have dampened both labour demand and supply.
At the same time, heavy investment in artificial intelligence is prompting businesses to reassess staffing needs, further limiting hiring plans.
Companies appear to be prioritising productivity gains over workforce expansion, contributing to slower job growth.
The claims data covered the period during which the government surveyed employers for the nonfarm payrolls component of January’s employment report.
Payrolls rose by 50,000 jobs in December, broadly in line with the average monthly gains recorded through 2025.
Benchmark revisions may reveal softer trend
Attention is now turning to the Bureau of Labor Statistics’ annual benchmark revision, due to be released alongside January’s employment report next month.
Preliminary estimates suggest job growth was overstated, with around 911,000 fewer jobs created in the 12 months through March 2025 than previously reported.
The discrepancy has been linked to the BLS’s birth-death model, which estimates job gains and losses from business openings and closures.
From January, the agency will revise the model to incorporate more current sample data each month, a change that could lead to lower reported employment levels.
Continuing claims fall, but job searches remain tough
Continuing claims, which track the number of people receiving unemployment benefits beyond an initial week and offer insight into hiring conditions, fell by 26,000 to 1.849 million in the week ended January 10.
Part of the decline likely reflects some claimants exhausting their benefits, which are capped at 26 weeks in most states.
Surveys suggest many laid-off workers are struggling to find new jobs, pointing to softer labour demand beneath the headline figures.
The four-week moving average of initial claims, which smooths out weekly volatility, fell by 3,750 to 201,500, underscoring the relative stability of the labour market.
Fed outlook and corporate layoffs
The Federal Reserve is widely expected to leave interest rates unchanged at its meeting next week, as policymakers balance sticky inflation against signs of cooling employment growth.
Uncertainty over who Trump will appoint as the next Fed chair is also weighing on markets, after renewed criticism of Jerome Powell for not cutting rates more aggressively.
Powell has warned that the labour market may be weaker than it appears, suggesting recent job gains could be revised lower.
Several major companies, including UPS, General Motors, Amazon, and Verizon, have recently announced job cuts, highlighting the challenges facing workers despite low headline claims.
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