Fewer Americans file for jobless benefits last week despite signs of a
slowing labor market
[September 26, 2025] By
MATT OTT
WASHINGTON (AP) — U.S. jobless claim applications fell to their lowest
level in two months last week as layoffs remain low despite mounting
evidence of a softening labor market.
The number of Americans filing for unemployment benefits for the week
ending Sept. 20 fell by 14,000 to 218,000, the Labor Department reported
Thursday. Analysts surveyed by the data firm FactSet had forecast
235,000 new applications.
Though layoffs remain historically low, recent government data has
raised concerns about the health of the American labor market, leading
the Federal Reserve to cut its key interest rate by a quarter-point last
week.
The rate cut is a sign that the central bank’s focus has shifted quickly
from inflation to jobs as hiring has ground nearly to a halt in recent
months. Lower interest rates can spur growth and hiring as individuals
and businesses benefit from reduced borrowing costs. The catch is that
it can also exacerbate inflation, which remains above the Fed’s 2%
target.
Stubborn inflation could make future interest rate decisions tricky for
the Fed, whose dual mandate is to support full employment in the labor
market while keeping inflation at bay.
Earlier this month, the Bureau of Labor Statistics issued a massive
preliminary revision of U.S. job gains for the 12 months ending in
March, revealing that the labor market has not been as strong as
previously thought.
The BLS’s revised figures showed that U.S. employers added 911,000 fewer
jobs than originally reported in the 12 months ending in March 2025. Job
gains were shown to be tapering long before President Donald Trump
rolled out his far-reaching tariffs on U.S. trading partners in April.
The department issues the revisions every year, with final revisions due
in February of 2026.
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"Now Hiring" sign is displayed at a retail store in Schaumburg,
Ill., Thursday, Sept. 18, 2025. (AP Photo/Nam Y. Huh)
 The updated figures came after the
agency reported earlier this month that the economy generated just
22,000 jobs in August, well below the 80,000 economists were
expecting.
Earlier this month, the government reported that U.S. employers
advertised 7.2 million job openings at the end of July, the first
time since April of 2021 that there were more unemployed Americans
than job postings.
The July employment report, which showed job gains of just 73,000
and included huge downward revisions for June and May, sent
financial markets spiraling and prompted Trump to fire the head of
the BLS, which compiles the monthly data.
The various labor market reports have bolstered fears that Trump’s
erratic economic policies, including the unpredictable taxes on
imports, have created so much uncertainty that businesses are
reluctant to hire.
The four-week average of claims, which softens some of the weekly
volatility, declined by 2,750 to 237,500.
The total number of Americans collecting unemployment benefits for
the previous week of Sept. 13 inched down by 2,000 to 1.93 million.
Weekly applications for jobless benefits are considered
representative of layoffs and have mostly settled in a historically
low range between 200,000 and 250,000 since the U.S. began to emerge
from the COVID-19 pandemic nearly four years ago.
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