Layoffs in US: Applications for Unemployment Benefits Rise to 2,00,000 but Remain at Historically Low Levels
US jobless claims rose to 200,000 last week but remain near record lows, signalling a resilient labour market despite high-profile tech layoffs and inflationary pressures. With continuing claims at a two-year low, the economy maintains a "low-hire, low-fire" status as the Federal Reserve monitors geopolitical uncertainty and elevated energy costs ahead of Friday’s jobs report.
The number of Americans filing for unemployment benefits rose slightly last week but remains at historically low levels, according to data released by the Labor Department on Thursday. Initial jobless claims increased by 10,000 to a seasonally adjusted 200,000 for the week ending 2 May. Despite the uptick, the figure was lower than the 205,000 applications economists had predicted, suggesting that the US labour market continues to withstand significant economic headwinds.
Historically Low Layoffs Amid Economic Strain
The latest figures indicate that layoffs remain muted across the broader economy, even as high-profile firms such as Amazon, Disney, and Morgan Stanley have announced job cuts. The four-week moving average, which provides a clearer picture of labour trends by smoothing out weekly volatility, fell to 203,250, a decrease of 4,500 from the previous week. PayPal Layoffs: CEO Enrique Lores-Led Fintech Giant Announces 4,760 Job Cuts To Accelerate AI Adoption and Tech Investment.
Continuing claims, which track the number of people consistently receiving state benefits, dropped by 10,000 to 1.77 million for the week ending 25 April. This marks a new two-year low, signalling that while new applications rose slightly, those already unemployed are potentially finding work or exiting the benefit rolls.
Impact of Geopolitical Tensions and Inflation
The resilience of the job market comes at a complex time for the US economy. The ongoing conflict involving Iran, now in its third month, has introduced substantial uncertainty. Although a ceasefire is currently in place, the war has driven energy costs significantly higher. Crude oil remains elevated at approximately 90 USD per barrel, contributing to a national average petrol price of 4.56 USD per gallon.
These energy costs have pushed inflation well above the Federal Reserve's 2% target. A key inflation gauge monitored by the Fed rose 0.7% in March, the sharpest monthly increase in nearly three years. Consequently, the Federal Reserve opted to maintain current interest rates last week, citing the need for caution amidst Middle Eastern instability and persistent price pressures.
The "Low-Hire, Low-Fire" Economy
Economists describe the current state of the US workforce as "low-hire, low-fire". While employers are reluctant to let staff go, new hiring has slowed significantly. Total job additions last year fell to fewer than 200,000, a stark contrast to the 1.5 million jobs created in 2024. Factors such as high interest rates, shifting tariff policies, and the massive capital investment required for artificial intelligence have contributed to this cautious recruitment climate.
The technology sector remains an outlier in this trend. While overall private-sector layoffs have receded, job cuts within the tech industry reached a three-year high last month. Many firms are reportedly redirecting funds toward AI infrastructure, often at the expense of traditional headcounts. Cognizant Layoffs: IT Giant May Cut Up to 15,000 Jobs Globally Under ‘Project Leap’, India To Be Impacted.
Friday’s Monthly Jobs Report
All eyes are now on the government’s comprehensive April jobs report, due for release on Friday. The data is expected to show the first back-to-back monthly increase in payrolls in nearly a year. This follows a volatile start to 2026, which saw a strong addition of 178,000 jobs in March after a surprising loss of 92,000 positions in February.
(The above story first appeared on LatestLY on May 07, 2026 07:14 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
