The number of Americans applying for unemployment benefits fell to a 10-week low. Initial jobless claims dropped by 8,000 to 208,000 in the week ending July 11, the Labor Department reported Thursday. The figure came in below economists’ forecasts, which ranged from 217,000 to 219,000.
Weekly claims are closely watched as an early measure of layoffs and the overall health of the labor market. Applications have generally remained between 200,000 and 250,000 since the economy recovered from the pandemic downturn.
The latest total was the lowest since early May. Claims had risen heading into the summer, partly because more school employees applied for assistance during the seasonal break. Applications peaked in early June and have since moved lower.
The four-week average, which reduces volatility in the weekly figures, fell by 4,750 to 214,250.
Continuing claims also declined. About 1.81 million Americans were receiving unemployment benefits in the week ending July 4, down by 16,000 from the previous week.
The decrease could suggest that some unemployed workers are finding new jobs. However, it may also reflect people reaching the end of their benefit periods. Many states limit regular unemployment assistance to 26 weeks.
The figures show that companies are still avoiding widespread layoffs, despite signs that hiring has weakened.
Employers added just 57,000 jobs in June, less than half the number added in May. The unemployment rate declined from 4.3 percent to 4.2 percent, although part of the drop occurred because some people stopped searching for work and were no longer counted as unemployed.
Private-sector payroll data have also pointed to slower job creation. ADP figures showed that private employers added an average of 19,750 jobs per week during the four weeks ending June 27. That marked the third consecutive week of weaker growth.
Several large companies have announced job cuts in recent months, including Verizon, UPS, Amazon, Disney, Starbucks, and Walmart. Microsoft recently said it would eliminate 4,800 positions, equal to about 2.1 percent of its global workforce.
Still, the broader level of layoffs remains low by historical standards.
“The labor market is moderating, not collapsing,” Joe Seydl, senior markets analyst at J.P. Morgan Private Bank, said in a July 14 research note. He said hiring trends remained stable and wage growth was contained, although weaker labor demand and falling workforce participation should be watched.
The labor market figures come as Federal Reserve officials weigh employment conditions alongside inflation when considering interest rate policy. Consumer inflation slowed to 3.5 percent in June, while core inflation eased to 2.6 percent.
The Federal Reserve is scheduled to hold its next policy meeting on July 28 and 29.