Fewer Americans Filed for Unemployment Last Week — But That Doesn’t Mean Jobs Are Easy to Find

The number of Americans applying for unemployment benefits dropped to a three-month low last week — the latest sign that the labor market is holding steady, even if finding a new job isn’t getting any easier.

New data from the Labor Department shows initial jobless claims fell by 4,000 to 217,000 for the week ending July 19, marking the lowest level since April and the sixth straight week of declines. That’s also better than Wall Street was expecting — economists had predicted around 226,000 claims.

So, while employers don’t seem to be letting workers go in droves, they’re not exactly hiring like crazy either. That slow hiring pace is keeping a lot of laid-off workers in limbo.

With President Trump’s tariffs starting to nudge inflation higher, the Federal Reserve is under pressure to hold steady on interest rates. And this latest data gives them cover to do just that.

“The labor market is holding up — barely — and that means the Fed likely won’t be cutting rates next week,” said Christopher Rupkey of FWDBONDS.

After cutting rates three times last year, the Fed is now expected to keep its benchmark rate at 4.25%-4.50% when it meets next week.

What’s Happening Behind the Numbers

• New York led the drop, with claims falling by over 12,000, reversing the spike from layoffs in public jobs, transport, and construction.
• California, Michigan, and Pennsylvania also posted big declines.
• Kentucky was the outlier — claims there jumped nearly 5,000, likely due to annual shutdowns at auto plants for summer retooling.

And while new jobless claims are down, continuing claims — the number of people still receiving unemployment after their first week — rose slightly to 1.955 million. That figure suggests many people are struggling to get hired again once they’ve lost a job.

Despite a slowdown in job growth from last year, the labor market isn’t collapsing — just coasting. Economists say the US only needs to add around 100,000 jobs a month (or even 70,000 by the end of 2025) to keep up with population growth, thanks to a decline in immigration and an aging workforce.

The jobless rate is expected to hold steady at 4.1% or possibly edge up to 4.2% in the upcoming July jobs report. Some forecasts even suggest no net job growth this month.

With input from Reuters and Bloomberg.