The number of Americans filing new claims for unemployment benefits rose more than expected last week, but the broader trend continued to point to a stable U.S. labor market.
Data released Thursday by the U.S. Labor Department showed the largest weekly increase in jobless claims in nearly two months. Economists said the jump was likely distorted by severe snowstorms across large parts of the country, as well as lingering volatility tied to seasonal adjustment issues around the holidays and the start of the year.
“There is no sign of the kind of layoffs we would expect to see in a weakening labor market,” said Carl Weinberg, chief economist at High Frequency Economics. “Claims remain very low and well within the range seen over the past two years.”
Initial claims for state unemployment benefits increased by 22,000 to a seasonally adjusted 231,000 in the week ended January 31. Economists surveyed by Reuters had expected claims to come in at 212,000.
Unadjusted data showed notable increases in states hit by harsh winter weather. Claims rose by 5,301 in Pennsylvania, 3,421 in New York and 2,214 in New Jersey, with additional increases recorded in Illinois, Missouri, Ohio and Wisconsin. Temporary job losses linked to weather disruptions likely played a role.
Even after accounting for these distortions, economists say the labor market remains in what is often described as a “low hire, low fire” environment. The four-week moving average of claims, which smooths out weekly volatility, rose by 6,000 to 212,250.
“Little has changed in the labor market since the fourth quarter,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
Following the data release, U.S. equities opened lower, the dollar traded little changed against a basket of currencies, and U.S. Treasury yields declined.
Planned layoffs rise, but impact remains uncertain
A separate report from outplacement firm Challenger, Gray & Christmas showed that announced layoffs by U.S. employers surged 205% in January to 108,435. However, much of the increase was driven by large announcements from United Parcel Service and Amazon. Economists cautioned that planned job cuts do not always translate into higher unemployment claims.
Similar high-profile layoffs last year, including at the same companies, did not result in a significant rise in weekly claims.
Analysts say ongoing uncertainty around import tariffs and the rapid adoption of artificial intelligence has contributed to labor market inertia, as businesses reassess staffing needs while investing more heavily in AI. Still, many economists expect hiring to improve later this year, supported by tax cuts and resilient consumer spending.
Continuing claims, which track the number of people receiving benefits after an initial week and serve as a proxy for hiring conditions, rose by 25,000 to a seasonally adjusted 1.844 million in the week ended January 24. The figure had declined for three consecutive weeks prior, partly due to seasonal adjustment effects.
The jobless claims data do not affect January’s employment report, which will be released next Wednesday after being delayed by a brief federal government shutdown. Economists currently forecast nonfarm payroll growth of around 70,000 jobs, following a 50,000 increase in December. The unemployment rate is expected to remain unchanged at 4.4%.
Labor market stability is likely to reinforce expectations that the Federal Reserve will keep interest rates on hold through the first half of the year. The Fed last week left its benchmark rate unchanged in the 3.50%–3.75% range.
