Claims for unemployment benefits drop to 197,000, the lowest since mid-July as layoffs remain rare

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WASHINGTON (AP) — Fewer people applied for U.S. unemployment benefits last week, as U.S. jobless claims remain at historically low levels and most Americans enjoy job security.

The Labor Department said Thursday that 197,000 people applied for unemployment checks last week, the fewest since mid-July and down from a revised 198,000 the week before. The four-week average of claims, which smooths out week-to-week ups and downs, fell to 202,250 last week from 204,000.

Claims for jobless benefits are a proxy for layoffs, and economists watch them because they can be a sign of where the job market is headed. So far this year, claims have mostly stayed below 220,000 — historically low.

The American job market has remained sturdy despite higher energy prices that have squeezed businesses and consumers since the fighting with Iran began Feb. 28.

Layoffs are low. Businesses, remembering the labor shortages that followed the end of pandemic lockdowns, are reluctant to let go of staff. They’re hiring — but modestly by the standards of recent years.

So far this year, employers — companies, government agencies and nonprofits — have been adding an average of 80,000 jobs a month, including a surprising 162,000 in August. That is an improvement on a dismal 2025 when monthly job creation averaged 9,700 as high interest rates and President Donald Trump’s unpredictable trade policies discouraged hiring.

The Labor Department will release the jobs report for September next week. It's expected to show that employers added 52,500 jobs and that the unemployment rate remained low at 4.1%, according to a survey of forecasters by the data firm FactSet.

Hiring remains well below the 166,000 monthly jobs created, on average, in 2023 and 2024, and the 491,000 a month recorded during the 2021-2022 hiring boom that followed COVID-19 lockdowns.