The number of Americans filing for unemployment benefits increased modestly last week, signaling that while employers are still holding onto workers, economic uncertainty—largely tied to U.S. trade policies—continues to weigh on the labor market.
For the week ending August 2, initial jobless claims climbed by 7,000 to 226,000, according to a Labor Department report released Thursday. This figure slightly exceeded economists’ expectations, which had forecast around 219,000 new claims.
This latest report is the first major government labor data release following a disappointing July jobs report, which rattled financial markets and prompted President Donald Trump to dismiss the head of the agency responsible for compiling monthly employment statistics.
Weekly jobless claims are considered a key indicator of layoffs and have generally remained within a healthy historical range of 200,000 to 250,000 since the early economic disruptions caused by COVID-19 in spring 2020. Notably, this was only the second increase in jobless claims in the past eight weeks.
While layoffs remain relatively low compared to past recessions, signs of weakening in the labor market have become more apparent in 2025. The government’s July employment figures showed a gain of just 73,000 jobs, falling short of the 115,000 jobs economists had anticipated. Additionally, downward revisions to May and June job numbers reduced those months’ job gains by a combined 258,000. The unemployment rate also ticked up slightly from 4.1% to 4.2%.
Analysts at Jeffries noted in a client briefing that the labor market continues to reflect a cautious “no hire/no fire” attitude among employers. Many experts believe that the unpredictable rollout of tariffs earlier this year has created uncertainty, causing businesses to hesitate before expanding their payrolls.
President Trump reacted strongly to the weak jobs report, accusing the data of being politically manipulated. He swiftly fired Erika McEntarfer, head of the Bureau of Labor Statistics (BLS), which produces the monthly employment figures. This dismissal was met with widespread criticism from economists and investors alike, who have long trusted the accuracy of the BLS data. These reports often have a significant impact on stock and bond markets.
It’s important to note that the BLS’s role in weekly unemployment claims is limited to calculating seasonal adjustments, which account for factors like weather and holidays. The weekly claims data itself is collected by the Department of Labor’s Employment and Training Administration from state unemployment offices.
Additional evidence of a softening labor market emerged in another government report last week, showing that job vacancies fell from 7.7 million in May to 7.4 million in June. The number of workers voluntarily quitting their jobs—a traditional sign of confidence in the labor market—also dropped to its lowest point since December. Hiring slowed as well.
Despite these trends, some major companies have announced layoffs this year, including Procter & Gamble, Dow, CNN, Starbucks, Southwest Airlines, Microsoft, Google, and Meta, the parent company of Facebook. Most recently, Intel and Walt Disney Company revealed plans for workforce reductions.
Many of President Trump’s proposed tariffs on imports came into effect on Thursday, although some exemptions and negotiations have extended deadlines. Economists worry that if these tariffs remain high without negotiated reductions, they could further hamper the economy and contribute to rising inflation.
Thursday’s report also showed that the four-week average of jobless claims, which smooths out weekly fluctuations, declined by 500 to 220,750. Meanwhile, the total number of Americans receiving unemployment benefits for the week ending July 26 jumped by 38,000 to 1.97 million—the highest level since November 2021.
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US Jobless Claims Drop for Fifth Week, Reach Lowest Point Since April
Jobless Claims in U.S. Dip to 227,000, Staying Within Healthy Range
