Applications for U.S. unemployment benefits fell last week to their lowest level in months, offering another sign that layoffs remain muted despite a range of economic pressures.
The 4-week moving average dropped to 202,500, its lowest point since 2024, as the labor market holds in a "low-hire, low-fire" state
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Applications for U.S. unemployment benefits fell last week to their lowest level in months, offering another sign that layoffs remain muted despite a range of economic pressures.
Thursday's Labor Department report showed 209,000 new applications for the week ending May 16, a decline of 3,000 from the previous week. The result came in below the 213,000 that FactSet-surveyed analysts had expected. At 202,500, the four-week average — which irons out week-to-week swings — marked its lowest reading since 2024, Bloomberg noted, representing a 1,500-point drop.
Continuing claims, covering the week ending May 9, climbed to 1.78 million, an increase of 6,000.
Economists treat weekly claims data as a timely, if imperfect, gauge of how freely employers are cutting workers. Even so, the broader picture is one of stagnation: the so-called "low-hire, low-fire" dynamic has anchored the unemployment rate at 4.3% while making it harder for displaced workers to land new positions.
Job-cut announcements have nonetheless piled up across corporate America, with Verizon $VZ, UPS, Amazon $AMZN, Disney $DIS, Walmart $WMT, Meta $META Platforms, Starbucks $SBUX, and LinkedIn among the names that have disclosed reductions. So far, those announcements have not translated into a broad rise in claims.
The labor market is dealing with several challenges. Hiring has slowed for about two years, and in 2025, federal workforce cuts under the Trump administration, ongoing tight monetary policy, and trade tariff uncertainty have added more pressure. FactSet reports that job creation last year was below 200,000, a sharp drop from about 1.5 million new jobs in 2024.
Energy costs have added to the uncertainty. Since the Iran war began in late February, the Strait of Hormuz has stayed shut, a disruption that has sent oil prices surging by more than half and pushed the nationwide pump price to $4.56 per gallon — up from below $3. April's consumer price data showed a 3.8% annual increase — the steepest in three years — and a separate wholesale-price report put producer inflation at 6% above year-ago levels, also a three-year high.
The Federal Reserve held its benchmark interest rate steady at its most recent meeting, citing Middle East instability and inflation that remains above its 2% target. Rate increases remain on the table for some members of the Fed's policymaking body this year.
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