U.S. Jobless Claims Dip Again, But Signs Point to a Softening Labor Market

by Worthy News Washington D.C. Bureau Staff

(Worthy News) – The number of Americans filing new claims for unemployment benefits fell for the sixth straight week, underscoring the continued resilience of the U.S. labor market. Yet behind the encouraging headline, economists warn that the broader employment picture is showing signs of softening.

For the week ending July 19, initial jobless claims dropped by 4,000 to 217,000, according to new data from the Department of Labor–marking the lowest level in three months and beating Wall Street expectations of 227,000. The four-week moving average, which smooths week-to-week volatility, declined to 224,500 from 229,500.

Continuing claims, which reflect the number of Americans still receiving unemployment benefits, rose slightly to 1.955 million from a revised 1.951 million the previous week. This marked the ninth consecutive week that continuing claims remained above 1.9 million–a level not seen in nearly four years. Economists say this persistent elevation indicates a tougher environment for the unemployed to re-enter the workforce.

“These data suggest employers are holding onto workers, but hiring momentum is cooling,” said a note from JPMorgan Chase analysts, who cited softening indicators such as weaker-than-expected private payroll growth and a reliance on state and local government jobs to sustain employment numbers.

A federal program tracking unemployment claims from government employees showed a sharp increase of 193 claims last week, rising to 789 total. That figure is 66 percent higher than the same period a year ago, raising further questions about job stability in the public sector.

Although layoffs remain historically low, hiring has slowed. In June, private payrolls added just 74,000 new jobs–well below forecasts–with half of overall job growth coming from state and local governments. Early projections for July indicate the U.S. economy added 110,000 jobs, while the unemployment rate ticked up slightly to 4.2 percent.

Federal Reserve Governor Christopher Waller, in a recent speech, acknowledged the mixed signals. “While the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed,” Waller said. “Other data suggest that downside risks to the labor market have increased.”

He added that with inflation near target, the Fed should not delay easing monetary policy. Markets are now pricing in a quarter-point interest rate cut at the Fed’s September meeting, following the central bank’s likely decision to hold rates steady next week in the 4.25% to 4.5% range.

Uncertainty around trade policy, particularly President Donald Trump’s evolving tariff strategy, continues to weigh on business sentiment. Many companies report delaying hiring and investment decisions as they await clarity on the future direction of global commerce.

While the U.S. economy is still growing and layoffs remain constrained, the mounting evidence of a cooling labor market is prompting policymakers and investors alike to brace for potential headwinds in the months ahead. The July jobs report, due next week, is expected to provide a clearer signal of the labor market’s trajectory.

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