US jobless claims fall to 208,000, lowest in 10 weeks

The US labor market showed unexpected resilience last week as initial jobless claims fell to 208,000, the lowest in 10 weeks and well below the 217,000 economists had forecast in a FactSet survey.

The Labor Department's report Thursday showed claims for the week ending July 11 dropped by 8,000 from the prior week's revised 216,000. The four-week moving average, which smooths weekly volatility, declined by 4,750 to 214,250.

Continuing claims, which track Americans already receiving unemployment benefits, fell by 16,000 to 1.805 million for the week ending July 4, also below expectations. The last time initial claims were this low was the week ending May 2, when they touched 207,000.

The data complicates the Federal Reserve's path on interest rates. A resilient labor market reduces pressure on the central bank to cut rates aggressively, even as June's nonfarm payrolls report showed hiring slowed to just 57,000 jobs. The unemployment rate fell to 4.2% from 4.3% in May, though largely because workers left the labor force. Overnight-indexed swap markets trimmed bets on a September rate cut after the claims release.

Hiring Slows Even as Layoffs Stay Low

The divergence between low layoffs and slowing hiring reflects a labor market in transition. Companies including Verizon, UPS, Amazon, Disney, Starbucks and Walmart have trimmed head counts in recent months. Last week, Microsoft said it was cutting 4,800 jobs, about 2.1% of its global workforce, with a large portion at its Xbox gaming unit.

Weekly jobless claims have stabilized mostly between 200,000 and 250,000 since the US emerged from the pandemic recession. But hiring began decelerating about two years ago and tapered further in 2025, weighed by President Donald Trump's tariffs, federal workforce reductions and the lingering effects of high interest rates.

Dollar Gains as Rate-Cut Bets Fade

The greenback strengthened after the data, with the US Dollar Index rising to 100.60, reversing two consecutive daily declines. A stronger labor market supports the dollar by reducing the likelihood of near-term Fed easing, which would otherwise diminish the currency's yield advantage. The 2-year Treasury yield edged higher following the release.

The next major test for the labor market comes with the July nonfarm payrolls report, scheduled for release on Aug. 7. Economists currently expect employers added about 150,000 jobs, a figure that would signal stabilization after June's tepid gain.

This article is for informational purposes only and does not constitute investment advice.