U.S. Jobless Claims Fall to 197,000, Lowest Since Mid-July

First-time U.S. unemployment claims dropped to 197,000 last week, the Labor Department reported Thursday — the lowest weekly reading since mid-July and down from a revised 198,000 the prior week.

The four-week average, which smooths week-to-week volatility, fell by 2,500 to 200,000. So far this year, claims have mostly stayed below 220,000, a level economists consider historically low.

Claims serve as a proxy for layoffs, and economists track them closely as an early signal of where the job market is heading. Right now, that signal points to stability: layoffs are low and most American workers enjoy job security, according to the AP's Paul Wiseman.

What does this mean for the national labor market?

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.

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

The context matters for anyone comparing today's market with the recent past:

• 2021–2022: 491,000 jobs added per month on average during the post-COVID hiring boom
• 2023–2024: 166,000 per month on average
• 2026 so far: 80,000 per month, including 162,000 in August

Hiring remains modest by the standards of recent years, but businesses are still hiring — and, critically, they are not cutting.

Why are companies holding onto workers?

Businesses remember the labor shortages that followed the end of pandemic lockdowns, and that memory shapes their behavior. They are reluctant to let go of staff even amid cost pressures, which keeps layoffs low and underpins the weak claims numbers.

For an individual worker, this translates into a specific market position: the risk of involuntary job loss is near its lowest since mid-summer, but the pool of new openings grows more slowly than in 2023 or 2024. Job security currently outruns job mobility.

What comes next?

The Labor Department will release the September jobs report next week. A survey of forecasters by the data firm FactSet expects employers added 90,000 jobs and the unemployment rate held at a low 4.1%. If those expectations hold, the claims data suggests the labor market will enter the final quarter of 2026 still leaning on retention rather than reduction.