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The number of Americans filing new applications for unemployment benefits fell slightly last week, offering further evidence that the U.S. labor market is stabilizing after a period of softness, though some underlying weakness remains.
Initial claims for state unemployment benefits declined by 5,000 to a seasonally adjusted 227,000 in the week ended February 7, the Labor Department said on Thursday. The reading came in slightly above economists’ expectations of 222,000, suggesting that improvement in labor conditions remains gradual rather than robust.
The modest decline reversed only a small portion of the previous week’s sharp increase, which economists largely attributed to snowstorms and unusually cold weather across large parts of the country. Seasonal distortions tied to the year-end and early-2026 period also played a role. Since late November, weekly jobless claims have fluctuated within a relatively narrow range of 192,000 to 237,000, consistent with a labor market that is cooling but not deteriorating sharply.
The claims data followed a government report released on Wednesday showing that job growth picked up in January, while the unemployment rate edged down to 4.3% from 4.4% in December. However, revisions to earlier data painted a less encouraging picture, revealing that job growth nearly stalled in 2025, averaging only about 15,000 new jobs per month.
Economists say restrictive trade and immigration policies weighed on labor market momentum last year, but many remain cautiously optimistic that hiring will improve in 2026, supported in part by recent tax cuts.
Not all analysts share that optimism. Some view the smaller-than-expected drop in jobless claims as a sign that labor market conditions remain fragile, despite recent headline improvements.
Further evidence of mixed conditions emerged in continuing claims data. The number of people receiving unemployment benefits after an initial week of aid—a proxy for hiring activity—rose by 21,000 to 1.862 million in the week ended January 31. These figures, too, have been affected by seasonal volatility.
While fewer workers experienced extended spells of unemployment in January, the median duration of joblessness remained near levels last seen four years ago. Recent college graduates, in particular, continue to face difficulties finding employment, highlighting pockets of stress beneath the surface of an otherwise steady labor market.
Overall, the latest data suggest a labor market that is stabilizing but still vulnerable, reinforcing expectations that policymakers will remain cautious as they assess the balance between economic resilience and lingering weakness.
