Applications for U.S. jobless benefits rose to a three-month high last week, although they remained within a generally healthy range seen over the past few years.
For the week ending February 22, the number of Americans filing for jobless benefits increased by 22,000 to 242,000, according to the Labor Department. Analysts had expected 220,000 new claims.
Weekly jobless benefit applications are often used as an indicator of layoffs.
The four-week moving average, which smooths out weekly fluctuations, increased by 8,500 to 224,000.
Some experts believe that layoffs resulting from the Department of Government Efficiency’s orders may appear in upcoming reports.
Joseph Brusuelas, chief economist at tax and advisory firm RSM, stated that he doesn’t foresee a sudden surge in layoffs or unemployment for now.
“At this point, it is more likely to be a gradual increase in the pace of firings,” Brusuelas explained.
On Wednesday, senior U.S. officials initiated the process of downsizing the government through a memo that significantly broadens President Donald Trump’s efforts to reduce the federal workforce. Thousands of probationary employees have already been let go, and now the administration is focusing on career officials who are protected by civil service rules.
Government agencies have been instructed to submit their plans for a reduction in force by March 13. This plan will not only involve layoffs but also the elimination of certain positions entirely.
Although there have been some signs of a slight weakening in the labor market over the past year, it remains strong with plenty of job opportunities and relatively low layoffs.
Earlier this month, the Labor Department reported that U.S. employers added 143,000 jobs in January, a notable decrease from the 256,000 jobs added in December. However, the unemployment rate dropped to 4%, indicating that the labor market is still in a healthy state.
In late January, the Federal Reserve decided to keep its benchmark lending rate unchanged after implementing three cuts in late 2024. Fed officials are carefully watching inflation and the labor market for any signs of economic weakness. They now anticipate only two rate cuts this year, down from their previous forecast of four.
The latest government report on consumer prices revealed that inflation increased last month, raising doubts about whether the Fed will reduce rates at all in 2025.
The consumer price index rose by 3% in January compared to a year ago, up from a 3 1/2-year low of 2.4% in September. This new data shows inflation has remained stubbornly above the Fed’s 2% target for the past six months after steadily falling for about a year and a half.
Although layoffs are still low by historical standards, several well-known companies have already announced job cuts this year.
Workday, Dow, CNN, Starbucks, Southwest Airlines, and Meta, the parent company of Facebook, have all reduced their workforces in 2025.
Late in 2024, companies like GM, Boeing, Cargill, and Stellantis also revealed layoffs.
The total number of Americans receiving unemployment benefits for the week of February 15 decreased by 5,000, bringing the total to 1.86 million.