The number of Americans receiving unemployment benefits has climbed to its highest point in nearly four years, signalling a cooling labour market. Continuing claims for unemployment insurance rose to 1.97 million in late July, according to the US Department of Labor, marking the steepest level since November 2021.
This development comes as hiring momentum slows across multiple sectors, despite relatively low levels of new layoffs. Economists note that while job losses remain modest, those who are out of work are finding it increasingly difficult to secure new positions.
Rising Continued Claims Point to Longer Job Searches
According to the Department of Labor’s latest report, the number of people on unemployment benefits for at least one week increased from 1.85 million in early January to 1.97 million by late July. New claims rose by only 7,000 last week, indicating that the slowdown is driven less by a spike in redundancies and more by a prolonged search for work.
Daniel Zhao, chief economist at Glassdoor, said the figures illustrate a critical shift: “It means that it’s hard for unemployed people to get back into the workforce, but it also means that those unemployed workers might have to settle for a worse job, or people who are currently employed aren’t able to climb the career ladder.”
Labour experts attribute part of the slowdown to policy changes under the Trump administration, including higher tariffs, federal spending cuts and stricter immigration rules. New tariffs on imports from dozens of countries took effect in early August, raising costs for businesses and consumers. This, they say, is prompting companies in retail, construction and manufacturing to delay hiring or expansion.
Political Tensions and Policy Uncertainty Weigh on Employers
Economic uncertainty is also being amplified by political developments. According to official data, job growth in July fell short of expectations, with figures for May and June revised down by a combined 258,000 positions. The national unemployment rate edged up to 4.2 percent, a modest increase but the highest level in over a year.
The report prompted a sharp political response. President Donald Trump dismissed Erika McEntarfer, head of the Bureau of Labor Statistics, hours after the release, alleging — without evidence — that the figures had been manipulated. The move has drawn criticism from economists and former officials who warn that undermining statistical agencies risks damaging trust in government data.
Meanwhile, some employers are opting to retain current staff despite weaker demand, recalling the labour shortages experienced during the pandemic. Economists warn that if economic pressures persist, mass redundancies could follow, particularly in sectors sensitive to trade policy shifts.
