By Esther Ososanya

 The number of Americans applying for new unemployment benefits fell unexpectedly last week, providing fresh evidence that the U.S. labour market remains resilient, even as job growth cools and businesses grow more hesitant about hiring.

Initial jobless claims dropped by 4,000 to a seasonally adjusted 217,000 for the week ending July 19, the U.S. Department of Labour reported Thursday.

The figure came in well below economists’ expectations of 226,000, suggesting that most employers are holding off on layoffs even amid economic uncertainty and softer hiring trends.

The report underscores a cautious but steady labour market. Though June saw an eight-month high in jobless claims, recent declines suggest that employers are choosing to maintain existing staff levels rather than let workers go while awaiting more clarity on economic policy and inflation trends.

“Claims tend to rise slightly in July due to the annual shutdown of auto plants, which can distort seasonal adjustments,” said Gisela Young, an economist at Citigroup. “But as long as levels remain within recent ranges, there’s little cause for concern.”

Employers Hesitate to Hire, Not Fire

While job growth has slowed from the robust pace seen last year, companies are largely refraining from large-scale layoffs.

Instead, they are dialling back new hiring, reflecting broader economic caution influenced by inflation risks and uncertainties surrounding President Donald Trump’s trade policies.

This trend, however, has left many laid-off workers stuck in extended job searches, facing a labour market that, while stable, is less dynamic than in prior quarters.

READ ALSO: IMF Hails Nigeria’s Economic Reforms as Inflation Drops to 23%

The number of Americans continuing to receive unemployment benefits, known as continuing claims, rose by 4,000 to a seasonally adjusted 1.955 million in the week ending July 12.

That figure reflects individuals still receiving aid after their initial claim and is often used as a proxy for hiring strength. The increase coincides with the government’s reference week for calculating July’s unemployment rate.

Unemployment Rate Likely to Hold

Economists say the elevated level of continuing claims may present some upside risk to the national jobless rate, but most still expect it to remain at 4.1% in July, unchanged from June’s modest dip.

That recent decline, however, was driven in part by a shrinking labour force as some job seekers gave up looking for work.

With the labour force participation rate under pressure and immigration flows slowing, the threshold of monthly job gains needed to maintain current unemployment levels is falling.

Goldman Sachs economist Elsie Peng projected that the “breakeven rate”, the number of new jobs needed per month to keep unemployment steady, could drop from 90,000 today to about 70,000 by the end of 2025.

“The drop in labour supply means the economy can sustain low unemployment with fewer jobs created each month,” Peng noted.

Fed Unlikely to Cut Rates Further—For Now

The labour market’s continued strength also gives the Federal Reserve little urgency to resume interest rate cuts.

The Fed, which lowered rates three times in 2024 to cushion the economy against inflation and trade-related risks, is expected to hold its benchmark interest rate steady at 4.25% to 4.50% during its policy meeting next Wednesday.

Despite persistent pressure from President Trump to further lower borrowing costs, the central bank has signalled that it will wait for clearer signs of economic softening or inflation shifts before making any moves.

For now, the message from the labour market is clear: while hiring may be slowing, layoffs remain limited—a delicate balance that could define the U.S. employment outlook heading into 2026.