Slightly more Americans file for jobless benefits in the last week of 2025, but layoffs remain low

U.S. jobless claims rose in the final week of 2025 but remain at historically low levels despite growing evidence of a weakening labor market, according to data released Thursday by the Labor Department.

Applications for unemployment benefits increased by 8,000 to 208,000 for the week ending January 3, up from 200,000 in the previous week. The figure matched economists’ expectations in a FactSet survey.

The slight uptick in jobless claims comes amid mixed signals in the labor market as the Trump administration’s tariff policies and lingering effects of previous interest rate hikes continue to create economic uncertainty.

“These weekly claims figures remain historically low, but they’re just one piece of a complex labor market puzzle,” said Mark Hamrick, senior economic analyst at Bankrate. “When viewed alongside other recent employment data, we’re seeing clear signs of cooling.”

In November, the U.S. economy added 64,000 jobs, a modest gain that followed a concerning loss of 105,000 positions in October—a decline partly attributed to federal workforce reductions implemented by the Trump administration. These shifts pushed the unemployment rate to 4.6%, its highest level since 2021.

The government will release its December jobs report on Friday, with economists projecting a gain of approximately 55,000 non-farm jobs, reflecting continued modest growth.

A separate Labor Department report released Wednesday showed businesses and government agencies posted 7.1 million open jobs at the end of November, down from 7.4 million in October. This decline in job openings suggests employers are becoming more cautious about expanding their workforces despite economic growth picking up in recent quarters.

Layoffs also decreased, indicating companies are holding onto existing workers even as they hesitate to add staff—a phenomenon economists describe as “low hire, low fire.”

“Companies appear to be in a wait-and-see mode,” said Diane Swonk, chief economist at KPMG. “They’re reluctant to add new employees given the uncertainty around tariffs and trade policies, but they’re also not rushing to cut their existing workforce, which suggests they believe current challenges might be temporary.”

Government data shows the labor market has clearly lost momentum since spring. Job creation has fallen to an average of just 35,000 positions per month since March, compared to 71,000 in the 12 months prior. Fed Chair Jerome Powell recently suggested that job figures could be revised downward by as much as 60,000, which would mean employers have actually been cutting an average of about 25,000 jobs monthly since the Trump administration implemented its sweeping import taxes.

Several major corporations have announced workforce reductions in recent months, including UPS, General Motors, Amazon, and Verizon, further highlighting the challenges facing the labor market.

In response to the softening job market, the Federal Reserve last month cut its benchmark interest rate by a quarter percentage point—its third consecutive reduction. Powell expressed growing concern that labor market weakness may be more severe than current data indicates.

“The Fed is clearly shifting its focus from inflation to employment stability,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings. “Their recent rate cuts reflect an attempt to provide support before any further deterioration occurs.”

Thursday’s report also showed the four-week moving average of jobless claims—which helps smooth out weekly volatility—decreased by 7,250 to 211,750. Meanwhile, the total number of Americans collecting unemployment benefits jumped by 56,000 to 1.91 million for the week ending December 27.

While current claims levels don’t yet signal a recession, analysts will be watching Friday’s comprehensive jobs report closely for additional insights into the labor market’s trajectory as the economy navigates trade tensions and monetary policy adjustments.