The number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting the labour market likely maintained a steady pace of job growth in January.
The Labour Department’s weekly jobless claims reports have in recent weeks been clouded by challenges adjusting the data for seasonal fluctuations around the year-end holiday season and turn of the year. Through the volatility, however, the labour market has remained in what economists and policymakers call a “low-hiring, low-firing” state.
The economy is experiencing jobless growth, with other data yesterday showing gross domestic product increased at a slightly more robust pace in the third quarter than initially estimated amid strong consumer and business investment in artificial intelligence as well as a smaller trade deficit.
“The United States is experiencing a jobless boom where strong growth is powered by AI investments and consumption by wealthier families, but there is almost no hiring,” said Heather Long, chief economist at Navy Federal Credit Union. “It’s an uneasy situation for many middle-class families. One of the big questions for 2026 is whether the middle class will start to feel the uplift from the boom.”
Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 200,000 for the week ended January 17, the Labor Department said. Economists polled by Reuters had forecast 210,000 claims for the latest week.
Economists say President Donald Trump’s aggressive trade and immigration policies have reduced both the demand for and supply of workers. Businesses are also unsure of their staffing needs as they invest heavily in AI, limiting hiring.
The claims data covered the period during which the government surveyed employers for the nonfarm payrolls component of January’s employment report. Nonfarm payrolls increased by 50,000 jobs in December, roughly in line with the monthly average for 2025. The Bureau of Labour Statistics’ annual payrolls benchmark revision, to be published with January’s employment report next month, is likely to show the loss of momentum started in 2024. The BLS has estimated about 911,000 fewer jobs were created in the 12 months through March 2025 than previously reported.
The overcounting has been blamed on the birth-death model that BLS uses to estimate how many jobs were gained or lost because of companies opening or closing in a given month. Starting with the January report, the BLS will change that model by incorporating current sample information each month.
The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, fell 26,000 to a seasonally adjusted 1.849 million during the week ended January 10, the claims report showed.
Part of the decline in the so-called continuing claims is also likely due to seasonal adjustment difficulties as well as some people exhausting their eligibility for benefits, limited to 26 weeks in most states. Those who are laid off are finding it difficult to land new jobs, a trend that is evident in surveys of consumers.
&uuid=(email))