The US labour market continued to demonstrate resilience as planned layoffs fell to their lowest level in two years, even as the number of Americans filing new claims for unemployment benefits edged slightly higher last week.
Data released on Thursday by the US Labor Department showed that initial claims for state unemployment benefits rose by 1,000 to a seasonally adjusted 199,000 in the week ended August 1. The figure was below the 202,000 claims forecast by economists surveyed by Reuters, indicating that employers remain reluctant to reduce their workforce.
After a temporary increase in unemployment claims in June, filings have steadily declined. Economists said seasonal adjustments may have influenced recent data, but layoffs have remained historically low despite economic pressures, including higher oil prices linked to the US-Israeli conflict with Iran.
A separate report by Challenger, Gray & Christmas also underscored the labour market’s resilience. The global outplacement firm said US employers announced plans to cut 33,429 jobs in July, a 27% decline from June and the lowest monthly total in two years. Planned layoffs were also down 46% from the same month last year, while total announced job cuts so far in 2026 have fallen 41% compared with the corresponding period in 2025.
Andy Challenger, Chief Revenue Officer at Challenger, Gray & Christmas, said the pace of layoffs slowed significantly over the summer, adding that workforce reductions remain concentrated primarily in the technology sector as companies continue restructuring around investments in artificial intelligence.
The labour market’s resilience is expected to allow the Federal Reserve to maintain its focus on inflation risks linked to the prolonged Middle East conflict. The US central bank last week left its benchmark interest rate unchanged within a range of 3.50% to 3.75%, although policymakers remained divided over the future path of monetary policy.
Meanwhile, continuing unemployment claims, which measure the number of people receiving benefits after their first week of assistance, increased by 24,000 to a seasonally adjusted 1.801 million in the week ended July 25. The rise suggests that while layoffs remain limited, the pace of hiring has yet to accelerate significantly.
Investors are now awaiting the US July employment report, with economists expecting the economy to have added about 80,000 jobs last month after recording a gain of 57,000 in June. The unemployment rate is forecast to remain at 4.2%, although some analysts caution it could edge higher following recent surveys showing fewer Americans believe jobs are readily available.
Although job creation has moderated after stronger growth earlier this year, businesses continue to announce new hiring plans. Challenger, Gray & Christmas reported that planned hiring rose 47% in July to a four-year high, bringing total announced recruitment plans for 2026 to more than 107,000 positions, up 25% from the same period last year.
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