Jobless claims surged last week, reaching the highest level in nearly four years and signaling a potential slowdown in the job market.
The Labor Department said 263,000 people sought jobless aid for the week ending Sept. 6, up 27,000 from the previous week’s revised total and the highest since October 2021.
The four-week average for claims, which smooths volatility, also rose to 240,500, up nearly 10,000 from the prior week.
Carl Weinberg, chief economist at High Frequency Economics, said the increase is drawing attention from markets watching for signs of a slowdown. “One datapoint does not make a trend. But markets will see this big uptick in claims as the pop in layoffs we have been waiting for,” he wrote in a note to clients.
The rise in applications coincides with a decline in hiring. Government data showed employers added just 22,000 jobs in August, below economists’ expectations of 80,000. Summer payrolls grew by an average of 29,000 jobs monthly, well under last year’s average.
At the same time, layoffs remain low by historical standards, leading some economists to describe the current trend as “no hire, no fire.” Job creation has slowed, but widespread dismissals have not yet materialized.
Still, some analysts believe the latest claims data could mark a shift. Andrew Stettner, director of economy and jobs at the Century Foundation, said in an email that the new figures are one of the “clearest signs yet” that Americans are beginning to feel the impact of weaker job growth.
A Federal Reserve Bank of New York survey released earlier this week showed rising concern among workers about job prospects. The report found households increasingly doubtful about their ability to find employment in the event of job loss.
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said Thursday that “the latest jobless claims data, along with other recent labor market indicators, show signs of a more vulnerable job market. This will lead the Federal Reserve to lower interest rates at its meeting next week.”
The Federal Reserve has already been weighing whether to shift from its inflation-focused stance toward supporting the labor market. The Fed’s next policy meeting is widely expected to result in a quarter-point rate cut, which would reduce borrowing costs for mortgages, auto loans, and business credit.
The jobless claims report was released the same day as the Labor Department’s new consumer price data. Inflation rose 2.9% in August compared with a year earlier. This was up from a 2.7% annual pace in July. Prices remain above the Fed’s 2% target, complicating policymakers’ efforts to balance cooling inflation with a softening labor market.
Recent revisions to labor data also loom. The Bureau of Labor Statistics estimated U.S. employers added 911,000 fewer jobs between March 2024 and March 2025 than previously reported. The agency attributed the adjustment to businesses closing or hiring fewer than previously captured.
The broader economy has slowed in tandem with the weaker labor market. Gross domestic product grew at an annual rate of about 1.3% in the first half of 2025, down from 2.5% in 2024, according to Commerce Department estimates.
For now, economists say the trajectory of jobless claims will be closely watched. Weekly applications are often considered a reliable gauge of layoffs and a leading indicator of broader labor market conditions. Since the COVID-19 recovery began nearly four years ago, claims have remained largely within a historically low range of 200,000 to 250,000.
Last week’s sharp rise above that range is a clear signal that, after years of relative stability, the U.S. labor market may be entering a more vulnerable period. This increase in claims, combined with recent slower job growth and ongoing economic uncertainties, highlights growing concerns that the job market’s strength is faltering and could have broader implications for the overall economy.