Claims for unemployment benefits drop to 196,000, lowest since mid-July as layoffs remain low

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WASHINGTON (AP) — The number of people applying for unemployment benefits dropped sharply last week, another sign that layoffs remain rare and most Americans enjoy job security.

The Labor Department reported Thursday that jobless claims slid to 196,000, the fewest since mid-July and down from 206,000 the week before. The four-week average of claims, which smooths out week-to-week volatility, dropped to 203,250.

Economists had expected claims to come in at 207,500, according to a survey by the data firm FactSet.

Claims for jobless benefits are a proxy for layoffs, and economists watch them because they can be a sign of where the job market is headed. For the past year, claims have mostly stayed within a historically low range of 200,000 to 230,000 a week.

The American job market has remained sturdy despite higher gasoline prices that have squeezed businesses and consumers since the fighting with Iran began Feb. 28.

Layoffs are low. Businesses, remembering the labor shortages that followed the end of pandemic lockdowns, are reluctant to let go of staff. They’re hiring — but modestly by the standards of recent years.

So far this year, employers — companies, government agencies and nonprofits — have been adding an average 80,000 jobs a month, including a surprising 162,000 in August. That is an improvement on a dismal 2025 when monthly job creation averaged 9,700 as high interest rates and President Donald Trump’s ever-changing trade policies discouraged hiring.

But it remains well below the 166,000 monthly jobs created, on average, in 2023 and 2024, and the 491,000 a month recorded during the 2021-2022 hiring boom that followed COVID-19 lockdowns.