Labor market softens as jobless claims rise
By: Lucia Mutikani
Reuters
WASHINGTON - The number of Americans filing new applications for jobless benefits increased more than expected last week [08/29/2025] while hiring by private employers slowed in August, [2025] offering further evidence that labor market conditions were softening.
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The report on September 4 [2025] came on the heels of government data the previous day showing there were more unemployed people than positions available in July [2025] for the first time since the COVID-19 pandemic. Job growth has shifted into stall-speed, with economists blaming President Donald Trump's sweeping import tariffs and an immigration crackdown that is hampering hiring at construction sites and restaurants.
..... The slackening labor market likely positions the Federal Reserve to resume cutting interest rates later this month, [09/2025] though much would depend on August's [2025] employment report that is scheduled to be published on September 5. [2025]
..... "We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows," said Eric Teal, chief investment officer at Comerica Wealth Management. "The silver lining is the weaker the job data, the more cover there is for stimulative interest rate cuts that are on the horizon."
..... Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 237,000 for the week ending August 30, [2025] the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. There weer significant increase in unadjusted claims in Connecticut and Tennessee.
..... The number of people receiving benefits after an scintilla week of aid slipped 3,000 to 1.94 million during the week ending August 23, [2025] the claims report showed.
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still-high so-called continued claims are a reflection of a reluctance by businesses to increase headcounts. The Fed's "Beige Book" report on September 3 [2025] noted that "firms were hesitant to hire workers because of weaker demand or uncertainty."
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The claims data has no bearing on the closely watched employment report for August [2025] scheduled to be release on September 5 [2025] as they fall outside the survey period.
..... Economists are bracing for another month of tepid job growth. those expectations were reinforced by the ADP National Employment Report showing private employment increased by 54,000 jobs last month [08/2025] after advancing 106,000 in July. [2025] Economists had forecast private employment increasing by 65,000 jobs.
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A Reuters survey of economists expects the employment report will likely show non-farm payrolls increased by 75,000 jobs in August after rising by 73,000 in July. [2025]
..... Employment giants averaged 35,000 jobs per month over the past thee months compared with 123,000 during the same period in 2024, the government reported in August. [2025]
the unemployment rate is forecast to climb to 4.3% from 4.2% in July. [2025]