U.S. jobless claims edge lower as layoffs stay historically low

Applications for U.S. unemployment benefits fell to 215,000 in the week ending July 4, down 2,000 from the prior week and below FactSet’s forecast of 220,000. The drop came during the Independence Day holiday week and kept claims near the low end of the range that has dominated since the economy emerged from the pandemic recession.

Weekly claims are one of the quickest reads on layoffs because they move faster than the monthly jobs report, but they do not capture the full state of the labor market. The four-week moving average slipped to 218,750, while continued claims held at 1.814 million, a sign that layoffs remain limited even as some workers are taking longer to find new jobs.

The broader employment picture looked weaker. The U.S. Bureau of Labor Statistics said total nonfarm payrolls rose by just 57,000 in June, less than half the prior month’s gain, while the unemployment rate edged down to 4.2% from 4.3% in May. That decline was not a sign of stronger hiring: the labor force participation rate fell to 61.5%, the employment-population ratio slipped to 59.0%, and the number of unemployed people stood at 7.1 million.

The long-term unemployed, those jobless for 27 weeks or more, numbered 1.9 million in June, or 27.3% of all unemployed people. That figure was little changed from May but was up by 286,000 from a year earlier. The BLS said leisure and hospitality lost jobs in June, while professional and business services, social assistance and health care added workers.

The Federal Reserve’s June 3 Beige Book described labor conditions as “low-hire, low-fire,” even as some manufacturing contacts and temporary employment agencies reported growing labor demand. The mixed backdrop has been shaped by high interest rates, tariffs and federal workforce reductions, and it has already prompted cutbacks at companies including Verizon, UPS, Amazon, Disney, Starbucks and Walmart. Microsoft added to that list earlier in the week with 4,800 layoffs.