Jobless Claims Rise More Than Expected
By Reuters | 04 Sep, 2025

Uncertainty created by Trump tariffs and deportation drive is blamed for reluctance among employers to add staff.

The number of Americans filing new applications for jobless benefits increased more than expected last week, while hiring by private employers slowed in August, offering further evidence that labor market conditions were softening.

The reports on Thursday came on the heels of government data on Wednesday showing there were more unemployed people than positions available in July 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, though much would depend on August's employment report that is scheduled to be published on Friday. 

"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 jobs 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 ended August 30, the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. There were significant increases in unadjusted claims in Connecticut and Tennessee.

The number of people receiving benefits after an initial week of aid slipped 4,000 to 1.940 million during the week ending August 23, the claims report showed. 

The still-high so-called continued claims are a reflection of a reluctance by businesses to increase headcount. The Fed's "Beige Book" report on Wednesday noted that "firms were hesitant to hire workers because of weaker demand or uncertainty."

U.S. stocks opened mixed. The dollar rose against a basket of currencies. U.S. Treasury yields fell.  

The claims data have no bearing on the closely watched employment report for August scheduled to be released on Friday 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 after advancing 106,000 in July. Economists had forecast private employment increasing by 65,000 jobs. 

A Reuters survey of economists expects the employment report will likely show nonfarm payrolls increased by 75,000 jobs in August after rising by 73,000 in July. 

Employment gains averaged 35,000 jobs per month over the last three months compared to 123,000 during the same period in 2024, the government reported in August. The unemployment rate is forecast to climb to 4.3% from 4.2% in July.

Fed Chair Jerome Powell last month signaled a possible rate cut at the U.S. central bank's September 16-17 policy meeting, acknowledging the rising labor market risks, but also added that inflation remained a threat.

The Fed has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)