U.S. Jobless Claims Stay Low as Hiring Slows and Household Anxiety Grows

New applications for U.S. unemployment benefits edged slightly lower last week, pointing to continued restraint in layoffs, even as weak hiring deepens concerns among households about the labor market.

Initial claims fell by 1,000 to a seasonally adjusted 209,000 in the week ended January 24, the Labor Department said Thursday. The previous week was revised higher to 210,000. Economists had expected 205,000 claims.

The data included the Martin Luther King Jr. holiday, a period that often adds volatility. Seasonal adjustment challenges around year-end and a recent winter storm are also expected to keep figures choppy in the weeks ahead.

Despite the noise, claims remain historically low. Companies appear reluctant to cut staff while navigating an uncertain economic environment shaped by shifting trade policies. Recent layoff announcements from firms such as UPS and Amazon are unlikely to materially affect the claims data, mirroring last year’s experience when high-profile cuts did not trigger a surge.

Federal Reserve Chair Jerome Powell said this week that labor indicators suggest conditions may be stabilizing after gradual softening. The Fed left rates unchanged at 3.50% to 3.75%.

At the same time, signs of hiring weakness persist. Continuing claims fell by 38,000 to 1.827 million, though this series is also affected by seasonal distortions and benefit expirations. The unemployment rate dipped to 4.4% in December, but consumer surveys show rising pessimism about job prospects.

Economists attribute the subdued hiring pace to trade uncertainty, immigration actions that constrain labor supply, and businesses reassessing staffing needs as they invest heavily in artificial intelligence.

Attention now turns to January’s employment report, due next week, though a potential government shutdown could delay its release as Congress faces a funding deadline at the end of the month.